Spekulatius

I think FTDR and TRUP is fairly comparable in terms of the overall business model (not the target market). TRUP does need a lot of capital because there isn’t really any correlated risk like with casualty insurers where a huge storm can devastate huge areas at once, causing a lot of correlated claims. TRUP insurers a bunch of really small uncorrelated claims and rates can be fairly quickly adjusted too. . It is similar to a health insurers, which by the way often have negative tangible equity (look at UNH for example).

It is easy to throw comments out there. Can you support it with some facts? Book value of the asset management business is the investment in Alluvial. The revenue interests in Bonhoeffer have no book value and certainly has some worth. The Alluvial revenue interest is tied to the investment but I would argue has value in excess of the investment. Huckleberry is carried at cost. Likely worth more. The internet operations are clearly worth multiples of its 400k book. They earned over 725k pre-tax in ttm. Virginia real estate has already been written down. So there is no reason to value it at less than book. HVAC may be worth a bit less than book. That leaves Mt. Melrose. While some properties that have not been repaired may be worth a bit less than the purchase, those that have been repaired and have stable renters are likely worth more. Please explain why you disagree NPV corporate expenses needs to be factored in. From the most recent 10-Q: "Corporate expenses for the six months ended June 30, 2018 totaled $510,304." With 2 of the 3 business lines being workout situations, and the high afformentioned corporate cost burden, I don’t think book value represents a good value here, so it looks like SYTE is still overvalued from my POV. Doesn’t matter to me, because as it stands, it’s uninvestible for my anyways.

The chairman is leaving the company effective immediately, a subsidiary is buying real estate without the company knowing and is deemed 'not financially prudent' and now the real estate portfolio will be restructured. There are still many unanswered questions re: internal controls, restructuring costs, estimated losses on the real estate portfolio, etc. etc. If Biglari would do something like this the board would go utterly crazy. I find it hard to believe that you sincerely think you can release such a press release during market hours because you think it won't move the market. You know more than we do about the break-up so I guess it's possible you look at this press release with rosier glasses but still: blank out all the names, show the press release to any random investor and he/she will tell you in 5 seconds that this looks like bad news and I think you should have considered that. Yes, I don’t get it either how Jeff can buy another 83 properties (195-113) without the board knowing. there are not many charitable explanations for this. Managing a portfolio of 113 single home properties in Kentucky isn’t exactly like eating a piece of cake either and I think a disposition at a considerable loss is quite likely, now that interest rates move up. Jeff bought these so quickly in a geographically confined area, he almost must have cornered the market.

The new Sytestar looks like the old Sytestar. Reminds me of a book I read a long time ago in school - the title was “Animal Farm”.

I haven't seen anyone here with a long position, nor trying to justify one. I was just about to post the same. I see people trying to justify short positions and others saying that a short position is risky for one reason or the other. It seems simply not being short or thinking that there is a possible future (however unlikely) where Tesla succeeds, is so unthinkable here that it is worthy of a knee jerk reaction. If I were short TSLA before the quarterly report, I would consider my investment thesis to be broken. If I consider a thesis broken, I will exit the position (one of my few iron rules) not create a new thesis. just my opinion, I have no dog in this fight.

I have owned Pargesa in the past but found that this holding co is quite dull. I think they overpaid a bit for taking control of Imersys at this time. I also felt that the Belgian subholding GBL.BR is a better deal, because it is one level deeper in the holding structure and trades at a similar discount. I am not sure that this is still the case, but worth looking into.

The XR is easy to get, I know that much. My wife got it on its launch day (she preordered it) and there were no lines whatsoever at the store where she picked it up. This is strange to me since I feel that the XR is the best relative value in their lineup. Did the lose the battle for the middle range and are now just controlling the high end with $1k sales prices or more?

I don’t know either. I’d rather use a CC with low/no foreign transaction fees (from Capital One or a credit union) and some rewards than a debit card. However, in countries other than the US, those may not be readily available.

Overall returns, net of overhead runoff and investments gains/losses, have been weak. If you back out the non-cash gain from the Quess' accounting reclassification, book value barely grew. It'll be hard to achieve the 15% BV growth that FFH has been targeting. I think the market is waiting for better results on the investment side before it'll revalue shares. Yes, book value growth has been subpar. This is the case with a lot of peers as well, I assume due to market to market losses from the bond portfolios. FWIW, I own quite a bit of RE and AXS as well.

I have played similar situations before, but the results were hit and miss. Looking back at some of the double, well they became zeros (I sold befor this happens, because failure is mostly evident before). At this point, I am more tempted to play CVE, which is somewhat hedged against the heavy- light oil differentials and has a new managment and vastly improved metrics after that I’ll advised acquisition of COP oil sand assets. I think CVE also has the potential for a double (albeit less likely than OBE), but also much less likely to become a zero. Again, different strokes for different people.

I actually like COF (which has also been weak, probably due to the same issue, as they took over the portfolio from WMT) better, Stock is pretty cheap on a P/E basis (8x?) and their business is more diverse. Bought a few shares as an incentive to get to know the company better.

I don't think there was any mention of stock buyback in the latest FCAU earnings release. The bulk of their earnings is going to have to go back into the company....Even with increased financial scrutiny, the auto industry needs capital for tool & die, marketing, plant maintenance, pensions & so on. I think FCAU is going to need a good slug of capital to get an in house financing division going. If 60% of earnings goes back into plant & equipment, 20% into dividends, 10% in debt reduction (cash buildup), 5% into pension, and 5% into financing (or other projects), that would be pretty good with me. Good point about building a financing arm. It will probably take several billion dollar in equity to fund this. I mentioned this before, but I consider it unlikely that any other automobile company could take FCAU over; there would just be too much political resistance. What FCAU really needs to do is get rid of the legacy Fiat operations in Europe. I am sure some noticed that they are actually losing money right now. Fiat has a high market share in their home country Italy, but is weak almost anywhere else. they need to do what GM did with Opel and dump it. This won’t be easy, since the populist government in Italy would be screaming bloody murder. Trump would do the same thing, if someone were to take over the NA operations or the entire company, so I don’t think we will see a merger any time soon, they have to go it alone.

I think it's just a bad business that has been good at selling hope, there's always a rainbow over the horizon, "look at this cherry-picked metric or that cherry-picked metric, doesn't it look good?" "If we can just sell this asset or get this oil price or whatever, we'll be golden", "forget about everything in the past, we're starting again from scratch and this time it'll be good!". That's what it seems to me at a glance, but I haven't spent much time on it. Yes, I think it is basically a bad business, kind of like airlines were back in the day - no barrier to entry, heavy capital outlays, management focused on growth and empire building, negative free cash flows.

I've also wondered about the working capital and I haven't seen a discussion of this on recent calls (I may be forgetting something). My assumption/positive spin is that they are stocking the channels in advance of growth (e.g. in whitespaces). Also, capex has averaged 4.7% of revenues here for the last 2 years. That's relatively high for the sector and very high for a no-growth company in the sector. I could be very wrong but I read both these stats as evidence that 3G, who are laser-focussed on long term cash flows, are investing for growth not just slashing costs. Clearly it is not working yet but one of two things ought to happen in the future: KHC starts to grow, or 3G admit defeat and run it for cash, in which cash flows have the potential to rise materially. 3G is essentially reversing course on their cost cutting strategy and increasing overhead, increasing Capex and marketing spent. The margin reductions are also evidence that they lost their pricing power. Now we have an expensive stock (12x EV/EBITDA) with a crappy balance sheet in a business that is getting worse and a management that just does a 180deg on their strategy. Why would anyone want to invest in this is unclear to me.

IBM is going to stop their stock buybacks for a couple of years to reduce debt. The Redhat acquisition can only pay off, if they can substantially increase this business by using their existing customer base and sales channels. IBM value is mostly in its customer relations and sales & marketing organization at this point, their R&D is just maintenance to prevent their existing franchises from melting to fast, hence acquisitions are necessary to keep this company afloat.

A lt of semiconductor stocks have become very cheap, just look at AMAT, TSEM. While these are not great comps for NXPI, it shows that the sentiment has soured.

The struggle is real:

If traditional is online news like washingtonpost.com, they only charge because they couldn't monetize it otherwise. All the news sites tried to rely on ads only but couldn't make it profitable. Their targeting was crappy, and ad placement either i) destroyed the user experience, ii) could be easily ignored, or iii) could be easily filtered with an ad blocker. Facebook doesn't have those problems. Traditional print where you charged both subscription and advertising was indeed an amazing business model while it lasted. You still need to pay for TV and watch ads in most channels. Yes, you can get over the air TV for free but few people do that.

I think Chinese government poses much bigger political risk to Tencent and Naspers than SA. I would happily pay 20% more for Tencent, BABAetc if I‘d be sure I could trust their accounting.

Traditional media has ads and charges subscription fees.

I think SOP valuation is the wrong approach here, because the business are so intertwined. I only see AWS as a standalone business (a few years ago, the knock on this was that AMZN itself is AWS largest customer, but that is not the case any more), but we don’t know how profitable AWS is and what the ROA looks like. Amazon music and video are just part of AMXN prime. Alexa as a standalone business would probably lose money and not be worth much, the value lies in having another avenue to engage with the customer, especially prime members. I am not even sure about advertising, because it also links in their shopping website. For me, as an AMZN customer, these are just vehicles to sell the prime membership. AMZN does a great job sucking you in and the prime membership presents a tremendous value, if you use their music and video offering and addition to shopping. if they can replicate that all over in the world (I think at least most of Europe seems to go thet way slowly) and continue finding new areas of angagement eith the customer, the network effects are going to be tremendous and basically irreplaceable and whole would be worth much more then the pieces.

You could do that, but would that be a better way to value it? With more thinking, I think you can do better than that. For example, by how much is each of these companies voluntarily under-earning right now because they're investing in things that will have good returns in the future? I think each are to a certain extent, but Amazon is the king of that, taking the old Malone TCI approach of not having earnings today (though that's changing a bit) to have more growth and more earnings tomorrow, rinse and repeat. What if Amazon decided to target growth of 10% (which would put it higher than most retailers) and just let everything else fall to the bottom line? Fewer AWS price cuts, fewer investments in new FCs and new countries and new devices and services and software and such, just optimize for earnings? How much would they earn? That's unknowable, but you can take some guesses that are probably closer to the truth than just looking at current P/E, which is depressed by large investments in things that won't pay today (like large investments in India, large capex for AWS, large investments to bring 1-day delivery to more markets, food delivery to more markets, building new software products (AI, databases, ML, etc). I know it’s provocative to value AMZN this way (comparing to FB or GOOG is more a relative valuation than an absolute one), but one could make the point that both FB and GOOG have unmonetized assrgs too (I think GOOG spends ~$750M/quarter in “other bets”, so it’s not totally out of the blue. That said, I do acknowledge that AMZN does not manage the company to optimize for near term profit, but for user experience and network effects, so it is worth more than $400/ share, but is it worth $1500? I am not that sure. I feel it’s much easier to determine that FB and GOOG are undervalued using current valuations.

Sez the guy who could retire semi rich, if he wanted to, after working for FB.

^ I beg to differ. any company that can grow their revenues by 33% YoY and generated any FCF at all is in pretty good shape. It is correct they FB is currently throwing bodies at its problem (monitoring, security etc), but I think in due time, they will find way to automate these functions and margins could well reverse to 50% again. It is true that they will need to find new ways to stay relevant, it’s. Its not like coke where you can sell the same thing for almost a 100 years.

Anyone want to bet if Warren gets a call from GE’s CEO again?