What are you buying today?

[no_free_lunch]

BRK.B at $196.69 (increasing stake from 55% to 65% of portfolio using essentially all accumulated cash awaiting investment + dividends received).

 

Portfolio is now 65% BRK.B, 28% AAPL, 4% WFC plus a few bits and bobs mostly at modest valuations. (My effective AAPL and WFC exposures are about 31% and 8% respectively on a look-through basis).

 

This is quite the concentrated portfolio!  It sounds like you have done your research and those two are very solid companies but still, I couldn't go this concentrated.  Just curious if you can disclose anything about your portfolio size.  Maybe something that keeps it relatively confidential such as portfolio size relative to a year of savings?

[DooDiligence]

BRK.B at $196.69 (increasing stake from 55% to 65% of portfolio using essentially all accumulated cash awaiting investment + dividends received).

 

Portfolio is now 65% BRK.B, 28% AAPL, 4% WFC plus a few bits and bobs mostly at modest valuations. (My effective AAPL and WFC exposures are about 31% and 8% respectively on a look-through basis).

 

See this message for reasoning: http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/2017-ye-intrinsic-value-versus-market-value/msg317834

 

This represents a bit of a change of opinion for me.

 

Looks like a sound investment for long term (I'd expect 7-10% CAGR above inflation) plus fairly high probability of limited downside risk over next year or two (meaning we should be able to snap up deep value bargains when we see them by trading some BRK.B or AAPL and any new cash awaiting investment, meaning we shouldn't lose a lot of that cash optionality and may gain some buying power if BRK.B appreciates above $196), by which time the buyback threshold should have reached our purchase price (unless the tax reform bill fails to make it into law, in which case it'll be a few years longer and we might have to ride out some temporary quotational losses, but should still be in line for 7-10% real terms return long term).

 

Courage!

 

I'd be prepared to go to 33 1/3 if the damn thing would drop but since it won't cooperate, I'll continue the DCA program (thanks to Fidelity for dropping trou (trow?) on commissions & making this possible.)

 

Need to free up some study time & I'd sleep like a baby owning that much BRK.B (I'm giving DQ gift cards to all my young friends & fams in an attempt to garner a new generation of biz for them & just realized that I need to add some See's boxes into the mix.)

 

If I were more generous, I'd buy someone a trailer...

[EricSchleien]

Purchased some shares in a litigation stub

Automodular?

 

Hey nope. Tell me more about Automodular. The litigation is Ambase (ABCP). You familiar with it?

[bskptkl]

Trades for roughly cash value - about $2.50 per share. Has a $25 mm suit (about $2 per share) against GM that goes to trial in February. Decent stewards of capital over the past few years as they have run off their business. The hope is not only they win, but they do something intelligent with the shell.

 

"Mr. Parsa Kiai is Director of the Company. Mr. Kiai resides in New York, USA and is the Managing Partner and Portfolio Manager of Steamboat Capital, LLC ("Steamboat"). Automodular was approached earlier this year (2013) by Mr. Kiai and Bo Shan of California, USA, Founder and Portfolio Manager of Gobi Capital, LLC ("Gobi")."

[frommi]

more SRG and SHOS

[Dynamic]

BRK.B at $196.69 (increasing stake from 55% to 65% of portfolio using essentially all accumulated cash awaiting investment + dividends received).

 

Portfolio is now 65% BRK.B, 28% AAPL, 4% WFC plus a few bits and bobs mostly at modest valuations. (My effective AAPL and WFC exposures are about 31% and 8% respectively on a look-through basis).

 

This is quite the concentrated portfolio!  It sounds like you have done your research and those two are very solid companies but still, I couldn't go this concentrated.  Just curious if you can disclose anything about your portfolio size.  Maybe something that keeps it relatively confidential such as portfolio size relative to a year of savings?

 

Portfolio size is 6 figures in both USD and GBP.

 

We're saving in 5 figures (both USD and GBP) each year now, investing from our after-tax salary into a tax-free ISA (no Capital Gains tax, no income tax on dividends from within the ISA).

 

From 2003-2014 I basically stopped adding new savings and actively investing and almost passively held about 70-80% BRK.B, 10-20% HLMA.L and 0-20% JPR.L plus some HPQ and A derived from my former employment. Despite JPR.L being a disaster - first via debt covenants then local newspaper monopolies being supplanted by online advertising, I must have compounded the pot at about 10% CAGR, probably a bit more than a triple.

 

I was very happy with BRK's:

• competent, trustworthy stewardship and shareholder orientation
  
• autonomous business units rather than central command
  
• reinvestment of excess capital by the 'capital allocator in chief' - you can have non-growing businesses generating cash which is put to better use elsewhere
  
• willingness to decisively take advantage of attractive investment opportunities especially in bear markets and other distressed circumstances with meaningful sums of money at attractive rates of return
  
• fixing of the insurance underwriter's usual badly crafted incentives that reward most to write more business rather less business when it's poorly priced (so I anticipated that the float would be cost-free on average over the next 10-20 years)
  
• diversity of earnings streams and businesses in uncorrelated sectors to ride through megacatastrophe years and support the ability to write lots of profitable insurance contracts at good prices after such years
  
• focus on long-term value creation rather than reported number
  
• good chances of Buffett running Berkshire well into his 80s or 90s and good succession planning thereafter

 

That list explains why I'm happy to hold 100% (or even a little more if I were to remortgage and invest the freed-up equity when it's really cheap) in BRK.B for the long term.

 

I sold HLMA at a reasonably high price (though it has gone up 58% plus dividends since partly thanks to non-GBP earnings) to go heavily into BRK.B at about $124 in Feb 2016 (which has gone up 76% since when measured in GBP currency).

 

Essentially, we're married with no kids (and no intention to have them) - I'm in my 40s and my wife is in her 30s, we own a small apartment of which we have 75% equity at current prices and the mortgage company has the other 25%, purchased in the 2009-10 slump. Our mortgage and service charge are very affordable (much less than equivalent rent), we live frugally, run one small and economical 5-yr-old second-hand car and two folding e-Bikes but still enjoy plenty of travel and fun times (and have the cash to buy or hire a large car when family visits from overseas). Our incomes are not enormous, in fact mine is below my very good 2003 income, but we enjoy our full time Mon-Fri work OK and have a good work-life balance and like the place we live, rather than moving to follow my original career path.

 

My employers are quite old so when my wife got full time employment we decided we'd try to live within one income and invest the after-tax portion of the other towards retirement and remain resilient to potential loss of employment while also accelerating our options for secure, comfortable, worry-free, and very likely early retirement, potentially having two homes, likely in our two native countries. We could also decide to take a work break and see the world while we're relatively young if we're in a suitable financial position.

 

When I went for AAPL at $95 in May 2016 (using cash savings plus the sale of some BRK.B at $140 to fund it), I felt it was a high conviction idea with good long-term value plus the prospect for rapid revaluation by the market. I wanted to really take advantage of such a high conviction idea with such a good margin of safety (as advised by Charlie Munger), but I am aware it's not as diversified as BRK.B, so I limited myself to a 25% weighting at time of purchase. Naturally, I anticipated it ought to grow, and might double to 50% of the portfolio rapidly, at which position I'd be uncomfortable with the weighting and would need to consider trimming back, thereby taking some profits and reducing my single-company risk at a time when it had less upside potential than at purchase.

 

As it happens it has grown about 80% in market price since, while BRK.B has grown about 40% since and we've added more cash, so it remains at a weighting and a price I'm not uncomfortable with. However, I am monitoring the value and position size quite closely, balancing my desire to keep a good compounder with my concerns over position size an potential for decline. It wouldn't take much of a rally from here for me to actually go ahead and trim back my position size, and another possible reason I'd do so is if I found another really high conviction idea I wanted to invest a sizeable sum in. Then I'd be looking to my more fully-valued shares like AAPL at present to fund such a position, so the market price may determine how my portfolio evolves.

 

I partly made such big bets on AAPL and BRK.B from conviction in the ideas, but partly because I knew we'd be saving heavily for at least a decade or two and could make up for potential losses due to crashes or company problems etc by investing that money well.

[no_free_lunch]

Dynamic,

 

Awesome.  This is the way to invest.  If you are still able to replace the savings then why not, worst case you don't ER as .. early.  It is interesting that you balance the high conviction with extremely strong companies (as far as BRK & AAPL).  I like how your approach frees you to really take your time on finding an idea. 

 

Every now and then I come across something with such strong upside/downside that I will make a large bet and I seem to do very well in those cases.  However I always limit myself to about 10% of assets so I just can't find enough bargains and end up filling with lower quality muck.  I have a lot to learn about portfolio sizing.

 

[Lance]

ESV (Ensco) and RIG (Transocean)

 

 

Thanks

Lance

[mattee2264]

 

Lance what is your thesis on these deep sea drilling contractors. I was attracted by the deep discounts to book and the industry consolidation.

And the contrarian in me is sceptical about the idea that shale will keep oil prices forever around the $50 mark.

And depletion means that oil majors will eventually have to start replenishing their reserves with deep water likely to be

a beneficiary. So eventually you will get a situation where demand and supply come into balance. But my worry is if that does not happen any

time soon competition for scarce contracts as well as need to service debt will result in them entering into longish contracts that do not offer much

in the way of profitability.

 

[DooDiligence]

 

Lance what is your thesis on these deep sea drilling contractors. I was attracted by the deep discounts to book and the industry consolidation.

And the contrarian in me is sceptical about the idea that shale will keep oil prices forever around the $50 mark.

And depletion means that oil majors will eventually have to start replenishing their reserves with deep water likely to be

a beneficiary. So eventually you will get a situation where demand and supply come into balance. But my worry is if that does not happen any

time soon competition for scarce contracts as well as need to service debt will result in them entering into longish contracts that do not offer much

in the way of profitability.

 

I stay in touch with former co-workers (mud boat trash) & will post as soon as I hear about boats being pulled out of stack.

 

Don't know how much of a front-run this will provide but prob better than nothing.

[SlowAppreciation]

VVI

V

 

I am interested to hear your thesis on VVI, as I work in an industry related to one of its businesses.  TIA

 

Here you go: https://minesafetydisclosures.com/blog/viad

 

Would love to hear your thoughts/feedback since you're in the industry and some of my assumptions may be wrong

[bizaro86]

I love VVI, and have for some time, especially the former Brewster businesses. I'm concerned about two things though, and would be interested in hearing any comments.

 

The first is where we are in the cycle. I can't shake the idea that this might be a cyclical dressed up as a growth company, and that buying after a big economic expansion might be a mistake. I would love to hear why I'm wrong on this one.

 

Recent acquisitions don't seem strong to me. AV seems more likely to commoditize  than booth/event management, especially as tech gets cheaper. I would have preferred they continued to outsource. Also, flyover seems like a way weaker attraction than something like the Banff Gondola, so you're diluting the business quality. Flyover has no moat, anyone can buy a motion simulator and rent some space, but the government isn't likely to rent out another mountain in Banff for a gondola. 100% moat vs no moat.

 

Anyway, would love to hear why I'm wrong on this, as pursuit (why rename it?) Is a business I would like to buy and hold forever.

[Lance]

 

Lance what is your thesis on these deep sea drilling contractors. I was attracted by the deep discounts to book and the industry consolidation.

And the contrarian in me is sceptical about the idea that shale will keep oil prices forever around the $50 mark.

And depletion means that oil majors will eventually have to start replenishing their reserves with deep water likely to be

a beneficiary. So eventually you will get a situation where demand and supply come into balance. But my worry is if that does not happen any

time soon competition for scarce contracts as well as need to service debt will result in them entering into longish contracts that do not offer much

in the way of profitability.

 

Hi Mattee, started looking at them as a result of a recent zerohedge article by Jim Grant.  I'd link to it but my iPad os not cooperating.

 

Thanks

Lance

 

 

[SlowAppreciation]

I love VVI, and have for some time, especially the former Brewster businesses. I'm concerned about two things though, and would be interested in hearing any comments.

 

The first is where we are in the cycle. I can't shake the idea that this might be a cyclical dressed up as a growth company, and that buying after a big economic expansion might be a mistake. I would love to hear why I'm wrong on this one.

 

Recent acquisitions don't seem strong to me. AV seems more likely to commoditize  than booth/event management, especially as tech gets cheaper. I would have preferred they continued to outsource. Also, flyover seems like a way weaker attraction than something like the Banff Gondola, so you're diluting the business quality. Flyover has no moat, anyone can buy a motion simulator and rent some space, but the government isn't likely to rent out another mountain in Banff for a gondola. 100% moat vs no moat.

 

Anyway, would love to hear why I'm wrong on this, as pursuit (why rename it?) Is a business I would like to buy and hold forever.

 

All good points, and I mostly agree.

 

Their two businesses are tourism (which is highly correlated to the health of the economy), and corporate events/exhibits (which is highly correlated to marketing budgets, which is also highly correlated to the health of the economy). In short, these are two areas where spending gets cut first during an economic decline. So I do think this business is going to be more cyclical than might be expected. And comps to previous down cycles are hard to come by since the business has changed so much due to acqs and spinoffs over the years. I read one analysis that argued the Pursuit business might even benefit from an economic downturn since it's cheaper/more local travel. Not sure I buy the argument, but I can't say confidently one way or the other. 

 

I think this is probably a very good company to buy when the cycle turns. Current earnings would be depressed, but it's fairly capital light, and they won't get buried by high fixed costs. Kind of like buying a staffing agency (e.g., Robert Half) during a down cycle. You know earnings will come back.. you may just not know when. And the company can sit there and bide its time until the economy turns.

 

When I first looked at the company a couple years ago, I thought they were only focusing on growing the Pursuit business. But it looks like they're also accelerating the acqs on the GES side too. Management says the AV space is higher margin, though they've admitted the acq of ON Services has so far under delivered. Time will tell I guess...

 

I don't think FlyOver is all that bad though. While it's not my style (I hate rollercoasters and rides), reviews on TripAdvisor and Yelp are quite positive, and the returns on it are high. Low upfront cost, low maintenance, pretty much any increase in ticket prices goes to the bottom line, etc. Sure, it may not have a moat like a hotel in a National Park, but if you can make 20%+ returns for 7-10 years, then that's not half bad.

 

Also, should I start a separate thread for VVI?

[bizaro86]

Yes, definitely start a VVI thread. Your write-up was very good, and its definitely an interesting company. I have had it on my watch list for years.

[SlowAppreciation]

Yes, definitely start a VVI thread. Your write-up was very good, and its definitely an interesting company. I have had it on my watch list for years.

 

Just started one: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/vvi-viad-corp-15581/

[sleepydragon]

purchased February 2018 150 strike call options on Apple at 21.68 average cost.  this is a trade obviously

 

update - added more of same at 20.25, new average cost is 20.967

 

globalfinancepartners: would you mind to say why? why apple? and why buy the options instead of the stock? Thanks!!

[EricSchleien]

3 Buys Today:

 

1) Increased position in Liberty SiriusXM Group

 

2) Established a position in Steel Partners Holdings, LP

 

3) Established a position in S&W Seed Company

[sculpin]

VVI

V

 

I am interested to hear your thesis on VVI, as I work in an industry related to one of its businesses.  TIA

 

Here you go: https://minesafetydisclosures.com/blog/viad

 

Would love to hear your thoughts/feedback since you're in the industry and some of my assumptions may be wrong

 

The White Pass & Yukon Railway in Skagway would be the perfect asset for the Viad Pursuit business unit. Held be TWC Corp in Canada it is for sale....

 

White Pass & Yukon Route Railway | Scenic Railway of the World

 

https://wpyr.com/

 

Built in 1898 during the Klondike Gold Rush, the White Pass & Yukon Route is a marvel of engineering despite the harsh weather and challenging geography faced by thousands of railroad construction workers. Join us 119 years later as we take you on a journey to see our splendid panorama of mountains, glaciers and ...

 

 

TWC hires Brookfield to review holding in White Pass

2017-06-16 07:45 ET - News Release

 

TWC ENTERPRISES LIMITED ANNOUNCES STRATEGIC REVIEW

 

TWC Enterprises Ltd. intends to undertake a strategic review of its investment in White Pass & Yukon Route. The board of directors has appointed Brookfield Financial Securities LP as a financial adviser to assist in the process.

 

The objective of the strategic review is to evaluate the operations of the business and may include a sale of all or a portion of the business, as well as consideration of a separate public entity vehicle for White Pass. Consideration will also be given to any potential impact on TWC's golf course operations. Chief financial officer Andrew Tamlin stated, "We are seeking the best path forward for White Pass and believe it is prudent to analyze the business and its strategic opportunities at this time."

 

TWC does not intend to disclose further developments or updates with respect to this process unless and until its board of directors approves a specific transaction or otherwise concludes the review of strategic opportunities. There can be no assurance that TWC will enter into any transaction at this time or in the future.

[rkbabang]

Sold 85% of my MKL today and bought more BAM.

[gfp]

Hey sorry, didn't see this post until just now.  I follow Apple pretty closely and trade it a couple times a year it seems like.  I always use pretty deep in the money call options, with low premiums over their intrinsic in-the-money-ness...  I put the trade on (and still have the trade on) because I think Apple is going to have a great quarter, I've been impressed to see their supply chain ramp on the iPhone X and I think they sold a ton of phones at a very high average price.  My 70 year old mother in law even has an iPhone X on her new Comcast xfinity mobile setup (an amazing deal, by the way).

 

I also think Apple is one of the largest direct beneficiaries of the tax bill, they have a huge repurchase program, and the stock looked like it was going to break higher (and it did yesterday).  Today it was downgraded and traded really well and I added February 160 calls at 16.637 average cost. [edit: added again at 15.90 resulting in new avg cost 16.394]

 

The calls are obviously much more volatile than the equity but I am not new to options and while I wouldn't recommend others purchase call options basically ever - I do it myself from time to time.  Sometimes to hedge, sometimes to take on leverage - usually with in the money calls like these.

 

it's a speculation and it's one I've done the same way several times.  We'll see, but so far it is looking good.  I'm not a long term equity investor in Apple anymore, probably because I'm not super interested in 900 billion dollar market cap companies ($490 Billion market cap companies are more my speed LOL)

 

purchased February 2018 150 strike call options on Apple at 21.68 average cost.  this is a trade obviously

 

update - added more of same at 20.25, new average cost is 20.967

 

globalfinancepartners: would you mind to say why? why apple? and why buy the options instead of the stock? Thanks!!

[frommi]

SRG and more puts on IRWD,RGEN,AMZN,NFLX

[james22]

White Mountain (WTM) @ $850

[frommi]

SGX:BTG,  http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sgxbtg-hg-metal

[james22]

Vanguard's REIT index fund (VGSNX).