Spekulatius

I think my buy target for BRK.B would be ~$165 or about 1.2x book. I don’t consider it in value territory yet, just fairly valued.

Bought the FANG stocks GOOG and FB today. I think they are cheap with a Y2018 PE in the low twenties.

I believe you are incorrect and severely underestimate what led to this fraudulent behaviour and more importantly the scope of the Feds letter. The fraud perpetuated by WFC employees is just the tip of and iceberg, you need to ask yourself the question how it go to that point and what the broader implications are. Clearly the Fed thinks that way, so it is very relevant. Why do you think it's the tip of the iceberg? The big news in the Fed letter is the problem with WFC’s risk management, which sort of is unrelated to their failings regarding the consumer banking (unauthorized account openings). In my former post, I guessed, that this was discovered in an audit trail, when they were questioning management and apparently discovered, that management does not seem to have a good grasp on risk. I believe this is why the Fed stunted WFC’s growth. It is big news (if correct), because now we have two issues, rather than one and I think I lied lack of risk management is a tually a much bigger deal. People here talk about WFC’s great underwriting, but how do we know it is still true? Thry were better heading into the Great Recession, but that was 11 years ago, Things may have changed over time, we won’t know until a recession hits. Now granted, underwriting and risk management are two different things technically, but they are closely related and I can’t see how one is great without the other and vice versa.

Problem is that it was never priced as a turnaround stock to begin with. It would be priced as a turnaround stock at $100/ share. Even at a current $270/ share, the valuation is ludicrous for a turnaround stock, given current earnings.

Keep it quiet please..... I don‘t think that postings in an obscure finance message board will move the tape for $500+ billion market cap companies :o

Interesting job maning the platform when this rocket module is coming towards you at 500km/h. Doodiligence should into that after doing some due diligence. Certainly not dull.

Why do you think the Fed cares about WFC being down 10%? It’s still up from where it was a year ago, trades at 1.5x book and 13x earnings - hardly a distressed valuation. If anything, the Fed may feel good about feel good about kicking them where the sun doesn’t shine, to get WFC’s management going in the right direction.

It almost hurts to say it, but the FANG stocks GOOG and FB almost look cheap at low to mid twenties projected earnings for Y2018. They are cheaper than the index, considering their growth rates, superior profitability and financials and dominant market positions, IMO.

The economy was anything but fine in 2002. The tech bubble had burst, the utility sector was in shambles, 9/11 aftermath and a decent credit crunch with high spreads (not as bad as 2008, but still significant).

I believe you are incorrect and severely underestimate what led to this fraudulent behaviour and more importantly the scope of the Feds letter. The fraud perpetuated by WFC employees is just the tip of and iceberg, you need to ask yourself the question how it go to that point and what the broader implications are. Clearly the Fed thinks that way, so it is very relevant.

As I am reading the letter from the FED again, I can guess what happened. Starting with the investigation into the the fraudulent account openings in Spring 2017, the FED started to audit WFC management systems. As I recall, Stumpf stated in the Congress hearing that he did not know about many of the things going on at a branch level. The might seem like a. On ending answer, but from an auditor POV, it is a strong clue to dig very deeply on how the organization is actually run. I believe the latter audit found issues that go way beyond the issue of WFC defrauding customers and management not knowing about it (or claiming such). I believe this is why the FED letter contains such strong wording in terms of controlling growth and risk management -this isn’t just about how the deal with customers any more. Now WFC will have to redesign their management systems, out more controls in place and a very likely more bureaucracy until the whole system can become more streamlined again. This means increased cost, losing high potential employees and stunted growth. It certainly means get WFC’s risk management system is not best in class, quite the opposite.

Agreed. Here is a clip where Danny Devito explaining Ben Graham investing thinking. No other Hollywood movie comes close to understanding the investment process. https://www.youtube.com/watch?v=yypj-aYtp9c Saw that one and it is pretty awesome. +1

I guess every bubble goes through a stripclub phase, right before it pops. it appears like the mortgage / RE bubble had a strip club phase. I can personally attest to the telecom bubble in 2000 having a strip club phase - there we’re plenty good ones in Ottawa at that time. Now here we are in the crypto strip club phase. History does not exactly repeat, but it it does rhyme.

My rulemof thumb is that if the debt trades at less than 50 centennial the dollar, the debt should be looked at the same way than equity ( EBITDA/ EBIT to EV value being the best metric). bankruptcy can become Calvinball game when large players are involved in the stock or the debt.

I mentioned this before, but PDH, even before the recent writeoff has too small of am; asset base to be viable. It would need to be 5x or even better 10x larger to justify the current level of expenses and overhead. We will see if PDH is able time shrink the current overhead now that some of the business are gone. This stock is either a zero or they need to raise a lot of capital to increase the asset base, because it won’t happen from retained earnings.

Well, much of the debt are liabilities from GE financial. The debt levels aren’t really that high. It’s should be valued on the basis of Its SOP and ai think that value is north of $20/share. OK: Assume that most of the debt is related/in GE financial...and that GE Financial has good assets to offset the debts. So much so that it cancels each other out. Thus, GE is not as heavily levered as I initially thought it to be... Book value is still a bit above $7/share ($7.41). What type of ROE will GE be able to make on that book? 15%? I would argue that might be unrealistically optimistic at this point in time...but let us use that for discussion sake. That would get you earnings of about $1.05/share. Looking at analysts estimates for next year, they are coming in at a range of $.85 to $1.15/share. A P/E of something like 18.4 to 13.6. In all but the most optimistic analysts opinion, the stock looks fully valued on next years earnings. That is at/near a 52 week low. In recent memory, GE has tended to surprise on the DOWNSIDE. Their corporate culture is unquestionably WORSE now than what it was in the past. So I would argue that it is more likely than not to surprise to the downside or to have operational problems. Then you've got the pension problems. Recently, with a broadly rising market, this may be somewhat less than what it was even a year ago. Of course, I am a hard core value investor, and think that paying a P/E of double digits is "crazy". My expectations for valuation are frequently out of whack with what the market thinks is good/acceptable. I don’t think the ROE on a book value is a realistic way to estimate GE’s earnings power. I think a SOP analysis is better be sure GE is currently underesrming in several segments ( Energy, Finance, Trubines .) GE finance has $35 in equity and $150B in assets, so that is where most of the debt is coming from. I am not sure what it is worth after the rece;toy announced shortfall in insurance reserves, probably less than book value. GE energy is currently roughly breakevem, but the valuation of GE’s BGHE stake implies. $20B valuation. BHGE has a good balance sheet, FWIW. Then there is the aircraft turbine crown yewel, the infrastructure business and GE health care, which are good business, deserving a decent multiple, minus the pension liabilities (which should be smaller now than $30B, because the interest rates rise) and the bloated corporate overhead. It’s not a Valiant, where the whole business is broken and there are boatloads of debt. GE has debt, but it is manageable. I think they need to restructure the company, cut overhead cost, deal with the pension and insurance reserve shortfall and further reduce GE capital to the parts that are attached to existing business, sell GE finance or Spin it off ( they need the cash so selling makes more sense) and then just run the arircraft, infrastructure and healthcare business efficiently.

My second largest position also, after, you guessed it, BRK. It’s hard to justify paying more than $50/ share for this stock. I think it is a sell at $60. - totally overvalued. They are going to have the FED breathing down their neck for years, no growth, increased expenses and good people working for WF will move to competitors for greener pastures.

Well, much of the debt are liabilities from GE financial. The debt levels aren’t really that high. It’s should be valued on the basis of Its SOP and ai think that value is north of $20/share.

This area of north Florida is really nice and has a lot more leisurely pace than Miami. Maybe he's planning on becoming a big fish in a small pond (the yacht will look kind of ridiculous so he may have to scale that down a bit.) --- Is this anything? http://www.washingtonprime.com WPG is a B (or lower ) mall operator, optically cheap, but I would rather invest in Reits that one better properties, like KIM or a play like SRG. The mall sector is a battleground right now and I would rather own Reits that own better quality assets in this situation.

In my experience, Ib worked, when nothing else would (Fidelity, E*TRADE, Wells Fargo ) during October 2018, the flash crashes etc. It is the most reliable platform I am aware of.

Don‘t forget 844k in corporate cost annually. Cutting them will cost money first. If you put a 2–3x multiple on them, in the case of a liquidation or restructuring , PDH‘s NPV will be quite a bit closer to zero.

Yes, I believe for Elon, his companies are just the means to achieve his technological goals. I could easily envision a scenario, where Elon happily accomplished everything he wishes to, but his shareholders end up being broke.

No, I have not considered ENF. I oen already ENB , EEQ and SEP from the ENB empire and they is enough for me. I consider all of the above buys right now.

Higher LT interest rates, unless they are offset by higher growth rates, should put pressure on the valuation of a lot of asset classes, most importantly residential and commercial real estate. I know many like banks as a ply on higher interest rates and while it is true that they would benefit from higher NIM, the region banks loan portfolio are chuck full with commercial RE loans. Now add disruption in retail to this equation and I can see some real potential for nasty writeoffs for non performing loans in this sector. Reits are potentially going to be hit by a double whammy of lower asset valuation no higher financing costs, maybe even a triple whammy when they are in retail RE.

There isn’t much left once he got rid of his losers. St Joe looks like a dog to me as well.