Spekulatius

If you plot this relationship, you will see that risk goes up dramatically as PE increases. If you pay 50x (2% yield) and interest rates increase 1% (to 3% yield), then your stocks drop 34%. At a more "normal" 20x, the drop is only 16% for a 1% rise in rates. Theoretically, the risk premium should increase at lower interest rates to compensate for the higher risk. This risk premium puts a limit on the rational multiple you will pay. Very true. These relationships fall apart on the fringes. As we approach the ZIRP singularity, strange things are going to happen.

Besides the issues with the profit sweep and the conversatorship - how good would these business be without the government backing them up? What would their margins be and how much capital would they need to hold to run their business and insure millions of homes and assume the interest rate risk for millions for 30 year mortgages? How would they fare if the government would compete with them by founding a new GSE backed with a government guarantee?

How did you know that? :o But I guess that's normal with this guy. Having been burned by the Chinese reverse mergers, I guess he finally saved enough money to get back into the game again, so he is desperately needing to swing through the fence and make a large profit. Then he can start bragging about his legendary trade. Taleb's monkeys at work.

HOw do you trade these Korean stocks using Fidelity for example? I have signed up for International trading, but the Korean exchange is not supported for online trading apparently? Do I need to call a broker to do a trade?

I think we get the next bear market with zero percent interest rates and the Fed will try to find a way to ease further.

I don't think it's no brainer. Yes, his compensation would have been higher with investment format. But he would have faced at least couple of issues: - flighty capital, especially when his AUM would have become large - complications in acquiring full businesses. I guess hedge funds can do this, but there are likely issues. I think with just stock investing Buffett would have performed worse than he did with buying whole businesses. - possible regulations if his AUM got to BRK size? - no float? Though some hedge funds now have insurance companies for float, but then how is this different from BRK? I think Buffet would have hit a wall in terms of size when he had continued to operate as a partnership. I don't think it would have been possible to acquire the many business in BRK under an LP umbrella, and there is the issue with non-permanent capital as well.

I think the idea is to look for equities (leveraged, but paying down debt with FCF), that have the same treats like the private equity deals that work out from his set of data. These would be: 1) small caps that are leveraged 2) Reasonably valued per EV/EBITDA 3) showed a pattern of paying down their debt from FCF Not a bad idea. If there is a credit freeze, his fund will get absolutely destroyed, I think.

The funds look quite terrible. It's not just the performance (or lack thereof) that is bothersome - but when I look at the portfolios, I see a pattern of the largest position (by cost) going bust, while a lot of the smaller ones work out. Maybe he averages down on bad bets? The rationale for VRX looks amateurish too. I would not put a penny in these funds.

Count me in as an investor with no balls. Lot's of small positions, as I typically like to keep the allocation to 5% or less for every single stock. I can say from experience that this diworsificationnhas kept me alive. It's easy to make mistakes and it is fairly easy to make 2 big mistakes at the same time, since investing ideas coming from the same brain are somewhat correlated. If you only have 5 positions, and 2 of them are a bust, then you could be down 40%, which is a 2008/2009 style crash. Going back to Gilead, that would probably around a 3% allocation for me as well, because I think there are quite some risks there. I do agree that the stock is cheap, and their management has over time shown that they are smart and know how to develop best in class products, both in house, or from acquisitions. So, I think that in all likelihood, the drug pipeline is worth quite a bit. For a typical pharma, the pipeline of products is around 50% of the NPV and that is why itmis so hard to value the,. For Biotechs, it's often 70-100% (the latter if they haveno products yet), so you rally have to understand the pipeline and the trials that they are running, plus assess the science. the latter is way beyond he circle of competence for most of us, include myself. I gave up investing in Biotechs more than 14 years ago for that very reason.

MY suggestion: 1) Make annual vote in pay mandatory. It is already in some countries and I don't see, why the owners should not be allowed to decide on this 2) Make separation of management and board of directors mandatory. Oversight needs to be separated from execution or it's not oversight. This is already he case in many countries and I believe this will have some impact on the CEO/top management compensation as well. 3) Make is easier for shareholders to vote based on advisory groups. Allow for easier access to advisory groups and also allow for look through votes on mutual funds. I think divisors groups could make a large difference. Right now, most shares are held through mutual funds and those seem to vote mostly along with management. Voting on many individual stock positions held through individual accounts is time consuming and I suspect many individual investors forfeit their rights.

I believe the over-the-top promotion is part of Ackman's strategy with HLF. You don't see him pump his other positions to nearly the same degree. The reason being, when pyramid/ponzi schemes are revealed to the public for what they are, they run out of suckers and collapse. So the plan was to scare away distributors and potential new recruits to precipitate a collapse of HLF. That was Ackman's Plan B if the FTC failed to shut them down. Thus the website, lobbying, organized protests, death blow presentations, movie, CNBC appearances, etc. Herbalife is by far the most heavily scrutinized MLM and most people already think it's a pyramid scheme regardless of whether it's true or not. It must be much harder to recruit new members now than it was before, so it should make you wonder why it's still growing. I don't think it would be possible without a lot of demand coming from real repeat customers. I don't think the clientele interested in becoming a Herbalife distributor and those that watch/follow Ackman have much overlap. So far, all the wind that he had been making, did nothing and the stock is almost a double since he started, which is an easy and tangible way to show these folks that Ackman is wrong (at least for less inquisitive people). The fact, that he thinks that his 3 hour presentations to other hedgies do make a difference to a potential customer of HLF alone shows the hubris and the bubble that Ackman has surrounded himself. I would be surprised if more than 10% of HLF customers watch CNBC and the percentage that even know about Ackman is far likely much lower.

We cancelled our NFLX membership as well, for the same reason. We had it for 6 years or so, but also have prime and I found that more than 80% of what we watch in Netflix, is covered by Amazon Prime.

They outperformed the index over 5 and 10 years before the Valeant debacle by a narrow margin only, and lost that when Valeant lost most of it's value. Valeant was over 25% of their portfolio , so the performance impact was significant. However it is also clear that even without that Valeant debacle, they had performance issues already.

They underperformed, YTD, over 1 Year, 3 Years, 5 Years and over 10 Years. That all one needs to know. Another win for index funds. RIP

Statement from Icahn. If what Icahn said is true, then surely Ackman deserves an SEC investigation over his behaviour. I would think that if Jeffries indeed want to do a block trade for a huge amount of shares, they would not be allowed to name the owner of said shares. I doubt this works the way Ackman describes it anyways.

They don't move quickly, if they can't.

I don't like this company either, but shorting it does not seem like a good idea. Ackman is going to lose this one, I think. http://www.bloomberg.com/news/articles/2016-08-27/icahn-mocks-ackman-s-obsession-after-raising-herbalife-stake

Now that's the spirit. I raise a pint of Goose Island Kölsch to you.

If CBI get's new management, it is better to wait 6 month until the new management had time to inspect the closet for dead bodies.

was he even born? Obviously he went back in time. He used the Tesla that comes with a flux capacitor. That is the model which has an incredible battery that can deliver 1.21 gigawatts to the flux capacitor for time travel. Manufactured in the gigafactory of course. It's model E. You can order it for 2025, it's gonna be made in 2030, and delivered to you in 2018. That's why Elon is so good - he is ahead of his time because he can travel in the future. I vote for "not human".

I drink when I am not driving. Always looking forward to a glass of wine or a beer in the evening.

I think one of the reasons they are paid more is the technology. With private jets, smart phone, big data, etc, etc. A CEO can run a much bigger and more complex company than decades ago. It's like these mega sports stars, I don't think Lebron James is better thank MJ. However, with today's technology, he can sell to a much bigger audience and realize more value for himself. In today's world, it's more than ever winner-takes-all. It's not that those CEOs create more value. They are just in the right position to take more value created by other factors, such as technology. The same is true for everyone, even the lowest paid workers. I work as an engineering manager (low level) and have some low level temp workers operating $2M pieces of equipment. It makes a huge difference in va,UE creation for the company, if they do the job well, but very little of the value accrues to them. They are truly seen as a commodity and being replicable, which is true to some extend, except that the replacement could be a screwup guy. Yet, in the current economy, the value creation of some is not rewarded. My own take is that everyone is replaceable, which applies to CEOs as well. HAlf the CEOs That I worked for I'm my carrier did not make a whole lot of difference, I only, but they still get paid as if they did.

With prison population shrinking, and these private prisons basically being overflow facilities, I can see this business shrinking very quickly and permanently. I don't think CXW s a value investment at this point.

^^ I agree with above assessment. Tesla brought the electric car further than anybody else, but I think it won't work out for shareholders either. it is clear to me that Elon likes to live close to the edge and for the better or worse, seems to be completely ignorant of other people's opinion (which is why he churns so many in his business but also in his private life). Tesla has gotten all the access to funding they needed so far, partly due to very accomodating debt and equity markets. However, they are hemorrhaging money at higher rates going forward and if they have to raise money during a downturn, the dilution will be ugly, if they even survive. Of course everything could be peachy forever as well. Either way, I am watching from the cheap seats in the sidelines.

What is HSA moat? Nothing I see prevents large competitors to go in and squeeze the profit margins in this business. BOfA, Wells Fargo or online competitors like Ally could easily do that, I think. Other than some scale, I don't see where HSA's edge is. That is the difference to Fico. Fico has a moat due to their IP, HSA's moat is very narrow.