rb Posted August 27, 2015 Posted August 27, 2015 I am looking for public stocks that meet these two criteria (Berkshire excluded)! 1. A genius - an extremely talented capital allocator with unusual skills. Not just talking the talk but literally being able to execute above the rest. 2. A great asset or collection of assets with great returns. A quality jewel that you can feel very comfortable owning without worrying about it going away or decreasing in value and in fact commanding or likely to command a premium for that quality. To be honest, I can't really think of anything outside of Berkshire. Yes #2 alone could be nice but combine it with #1 and you have a dynamite investment at the right entry price. Maybe Bruce Flatt at Brookfield but I'm not so keen on the profit potential of the assets owned and their outstanding quality. Ed Clark at TD was that. It remains to be seen whether the guy he groomed to take over is too.
Uccmal Posted August 27, 2015 Posted August 27, 2015 I bought some cash by selling puts (for companies I would own). The volatility premium is yummy. Tried to fish for fun but caught nothing. Agree 100% with Uccmal that underlying US economy is doing just fine, so far. Expecting rate hike in September. What better time than when there's already a mess? Why wait for it to calm down and mess it up again? Surprising no one is mentioning GS, they got bashed because of the penalties, same same like JPM. And they will gain from all this volatility. Uccmal, Why did you buy the BAC 17s and not the BAC 15s? That's strange... isn't it like saying that you are expecting a quick shot up? Thanks. Hi Meiroy, No reason in particular. I already had some 17s. Either way the effect will be the same. I figure BAC is worth at least $21. I wont have these to expiry, anyways.
Guest Schwab711 Posted August 28, 2015 Posted August 28, 2015 I am looking for public stocks that meet these two criteria (Berkshire excluded)! 1. A genius - an extremely talented capital allocator with unusual skills. Not just talking the talk but literally being able to execute above the rest. 2. A great asset or collection of assets with great returns. A quality jewel that you can feel very comfortable owning without worrying about it going away or decreasing in value and in fact commanding or likely to command a premium for that quality. To be honest, I can't really think of anything outside of Berkshire. Yes #2 alone could be nice but combine it with #1 and you have a dynamite investment at the right entry price. Maybe Bruce Flatt at Brookfield but I'm not so keen on the profit potential of the assets owned and their outstanding quality. FICO and MCO (MHFI always seems inefficient but I'd include them as well). I could probably run MCO as long as I took a $1 salary and didn't show up at the office. The tailwinds (considering the global debt level) are possibly once-in-a-generation. People now receive FICO scores monthly as opposed to only when they are requesting credit. Somehow FICO's moat is widening and it's probably the least followed monopoly I know of.
kmukul Posted August 28, 2015 Posted August 28, 2015 Volatility is always expensive when there is tension and underlying has fallen considerably in price (which is usually correlated with a good price:value). There is no way around it. Just don't buy 6 years' worth of it is my motto. My speculation is that when the stock goes to $20 (whenever that is) or so I'll probably be able to write the $22 strike call for at least $2. So I think I'll get all this premium back in the end. So mentally if I look at it like that it's not so bad. Thanks eric for helping out people like me. Dont you think its better to buy GM calls now? in other words BAC is undervalued but GM is probably better to load up as its more undervalued?
ERICOPOLY Posted August 28, 2015 Posted August 28, 2015 Volatility is always expensive when there is tension and underlying has fallen considerably in price (which is usually correlated with a good price:value). There is no way around it. Just don't buy 6 years' worth of it is my motto. My speculation is that when the stock goes to $20 (whenever that is) or so I'll probably be able to write the $22 strike call for at least $2. So I think I'll get all this premium back in the end. So mentally if I look at it like that it's not so bad. Thanks eric for helping out people like me. Dont you think its better to buy GM calls now? in other words BAC is undervalued but GM is probably better to load up as its more undervalued? I don't know which is more undervalued. One problem with GM is that the dividend costs me 150 bps annually worth of taxes. That costs something like 16% over 10 years. It needs to be undervalued for that dividend to make any sense given my tax situation. Anyways... And to anyone that says that dividends support the price and people will pay a high multiple for dividends in this low rate environment: exhibit "A": GM stock. exhibit "B": SSW stock. I just think that if you have a taxable account (especially in California), then the IV calculation needs some tinkering. It's no longer only distributable earnings that matter, but actual distributed earnings and in what form (dividend or share repurchase). How much do you actually own of those earnings is what matters. I care about how much I actually get to keep -- it matters to me if the amount of undervaluation is merely going to wind up with the government.... or not. But if you think you'll make a quick capital gain and be out of the stock before you get taxed on the dividends, well then that's different.
kmukul Posted August 28, 2015 Posted August 28, 2015 I don't know which is more undervalued. One problem with GM is that the dividend costs me 150 bps annually worth of taxes. That costs something like 16% over 10 years. It needs to be undervalued for that dividend to make any sense given my tax situation. Anyways... And to anyone that says that dividends support the price and people will pay a high multiple for dividends in this low rate environment: exhibit "A": GM stock. exhibit "B": SSW stock. Are you saying GM isnt undervalued? Buffet doesn't seem to think so, Also as for dividends, when I am buying options are the dividend still an issue (sorry if its too naive). I know adds to the cost so thats painful
TwoCitiesCapital Posted August 28, 2015 Posted August 28, 2015 Picked up some more WFM and OUTR today to repurchase prior sales that I was lucky on my timing. Picked up more OGZPY and SBRCY during the recent sell off. Waiting for a good opportunity to sell my SPY puts and roll them forward. My limit orders didn't fill on Monday-Wednesday.
ERICOPOLY Posted August 28, 2015 Posted August 28, 2015 I don't know which is more undervalued. One problem with GM is that the dividend costs me 150 bps annually worth of taxes. That costs something like 16% over 10 years. It needs to be undervalued for that dividend to make any sense given my tax situation. Anyways... And to anyone that says that dividends support the price and people will pay a high multiple for dividends in this low rate environment: exhibit "A": GM stock. exhibit "B": SSW stock. Are you saying GM isnt undervalued? Buffet doesn't seem to think so, Also as for dividends, when I am buying options are the dividend still an issue (sorry if its too naive). I know adds to the cost so thats painful I said: "I don't know which is more undervalued". To this you ask "are you saying GM isn't undervalued?". Buffett doesn't pay 33% tax on dividends. It's more like 14.5% (roughly) given that he holds them within insurance companies. Oh, and he prefers wholly owned businesses (where there is no dividend tax). It would be among the list of several reasons why wholly-owned is his preference. The dividend expectations of the market are (supposedly) priced into the option. Unexpected dividend increases hurt the value of your calls -- the opposite if the dividend is not raised as expected or is cut. Open another thread topic if you want to discuss this more -- this is supposed to be "What are you buying today?".
TwoCitiesCapital Posted August 31, 2015 Posted August 31, 2015 Sold FCAU Oct15 13.000 puts @ 0.42 Sold SPY Mar16 190.000 puts @ 10.25 I'm trying to figure out what I want to do to hedge my portfolio. The volatility premiums have been juicy recently so I've been selling options (calls & puts) to increase income/cash positioning. I'm disappointed that my SPY puts limit orders didn't fill to sell the position last week at $17 and $14, but I got some great prices on other put sales for my underlying equity positions, and later on covered calls, to increase the yield on my cash. I want to remain hedged, but am hesitant to roll puts forward at these prices because I'm not good at timing when the decline will occur. Hoping for a nice day or two of solid market action to bring those prices down 20-25% before I begin rebuilding my hedge for 12-18 months out.
Travis Wiedower Posted September 1, 2015 Posted September 1, 2015 Been buying CTO as of late. One of the better examples of "heads I win, tails I don't lose much." Even the most conservative estimates value their assets at more than the current enterprise value. It may take time to sell their raw land but Albright (new-ish CEO) has been a performer since he arrived (and his pay package aligns him very well with shareholders). Not entirely sure what the upside is but I'm content knowing the long-term downside is close to nil and management is on my side of the table.
karthikpm Posted September 1, 2015 Posted September 1, 2015 Adding to BRK.B and BAM. Seems like a low uncertainty bet
dutchman Posted September 1, 2015 Posted September 1, 2015 Karthik, is Brookfield a big position for you? Have been looking at it, just worried it will keep going with the rest of the Canadian economy.
boilermaker75 Posted September 1, 2015 Posted September 1, 2015 Wrote some BRKB 130-strike Sept 4 expiration puts for $1.10 per contract.
rb Posted September 1, 2015 Posted September 1, 2015 Wrote some BRKB 130-strike Sept 4 expiration puts for $1.10 per contract. Those may get exercised.
karthikpm Posted September 1, 2015 Posted September 1, 2015 Karthik, is Brookfield a big position for you? Have been looking at it, just worried it will keep going with the rest of the Canadian economy. dutchman Brookfield is about 5 % of my assets. BRK is still by far the largest ( ~20%). I think their exposure is very global and they are smart capital allocators. I have a 10-15 yr view on them and will add on dips. They did very poorly in 2008-09 but hopefully will buy back some stock if there is a significant pullback. This is confirmation bias ---> http://brooklyninvestor.blogspot.com/2015/06/brookfield-asset-management-bam.html
boilermaker75 Posted September 1, 2015 Posted September 1, 2015 Wrote some BRKB 130-strike Sept 4 expiration puts for $1.10 per contract. Those may get exercised. I don't mind adding some BRKB at 129.
one-foot-hurdles Posted September 1, 2015 Posted September 1, 2015 Added to my positions in AIQ, FCAU and my HK realestate investment basket
thefatbaboon Posted September 1, 2015 Posted September 1, 2015 Bought my first BRK@130 welcome to the club :) Congratulations! (it's an easy stock to own, a real armchair ride)
CassiusKing1 Posted September 2, 2015 Posted September 2, 2015 Bought my first BRK@130 welcome to the club :) Congratulations! (it's an easy stock to own, a real armchair ride) Welcome and enjoy! http://i.ebayimg.com/00/s/MTYwMFgxMjAw/z/rQIAAOSwrklVTsmE/$_35.JPG
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