Jurgis

Some people will argue that S has spectrum more valuable than market cap (or EV). The issue is that it's not clear if there's a way to unlock that value. It might never be unlocked. OTOH that means shorting is risky. And contemplating why it's trading at $3 and not $7 or $1 is also pretty waste of time IMO. Any of these prices could be justified by just adjusting the probability and price of spectrum monetization. ;)

Can you remind me, is Twitter fast growing in any metric nowadays? ::)

Like Mike Burry did, yes? :P Every now and then life is subject to random error. :P To be fair, while Burry is brilliant, his early investors didn't know at the time that they were signing up for a big macro bet when they invested with him, they thought they were getting something else, so without the hindsight of knowing that the bet worked out in the end, it's pretty easy to understand that they were nervous and some wanted to get their money out. If I had put my money with him for his value-based stock picking abilities and learned that he was buying vast quantities of credit default swaps and side-pocketing the money, I might have gotten nervous too. I don't know. Liberty, the issue was not that they were nervous while the bet was working out. The issue is that they dumped him after he made multimillions for them. "So long and thanks for all the fish" and all that.

RR is totally not obvious to me. ;) well you do have to squint a bit It might work well out for you, but for me it's too much of a turnaround plus complex accounting. A pass. :)

RR is totally not obvious to me. ;)

Well, I bought some AAPL and NOV recently. ;) Not obvious buys though.

I don't see any obvious buys. Fairfax and BRK are closest to being buys for me... Well, maybe oil sector, but that's also not obvious. ;)

Like Mike Burry did, yes? :P

Buffett is not overpaying assuming there are no skeletons in PCPs closet and assuming airplane supercycle develops as rb alluded. The deal is not supercheap, but it is OK in this market. If market drops a lot in next year, Buffett may miss other opportunities. But this is unknown.

They are doing it with their private supervoting funds. ;)

The Rise of Conglomerates

I have a bunch of investing-related domains registered to myself. A bunch of them are expiring tomorrow & Tuesday. I am not going to renew them. If anyone wants them, either try to get them via domain services or contact me via PM and we can try to figure out if we can transfer them to you. Obviously you'd have to pay the domain fees going forward. The domains are not super great. Couple .com domains with Buffett investing misspellings. Couple .net, .org, .biz. Anyway, just FYI in case anyone is interested. ;) I get no benefit from this, so this is just public service announcement. ;) Take care

OK. :) Sometimes this is useful, sometimes not so much. At least we are not discussing what is the definition of "value investing". :P Yes, you are correct, by FCF I mean operating cash flow minus all capital expenditures (including acquisitions actually). Completely agreed. The problem for me is not professional capital allocators. I can decide that I like Mr. Cafe as capital allocator and invest in their company, but I don't like Mr. Provolone and not invest in their company. (Names chosen at random and do not represent any real or imagined individuals. :P) The problem is generic CEOs that usually have one or two approaches to capital allocation and just stick to them. And if you want to buy stock in regular companies (not run by professional capital allocators), you have to evaluate these CEOs. This might be somewhat easy if you believe that their capital allocation method has a long runway for their particular business and will work for a long time. Or it might be not easy if you are not sure or think that they are stuck with suboptimal approach and it's not clear whether they will change/improve/etc. One solution is not to buy stock in such companies at all. My solution is to buy stock, but demand lower price based on variety of metrics involving FCF, for example. Of course, like you said, others might judge the same CEO and their approach to be great. Or they might use other metrics to evaluate the margin of safety in such situation. AXP, IBM, or Cimpress might be examples of such situation. Note, that as much as I love companies run by professional capital allocators, I think that companies run by great business focused CEOs with some (limited?) capital allocation skills have higher potential. In other words, Microsofts, Starbucks, WalMarts usually outperform Berkshires, Clarkes and FRMOs. But it is just gut feeling. I may be wrong. And I sidestepped the question of where I would put Transdigm, Danaher, etc.

Oh well, we are down to word sense discussion. :) I'll parry with But, yeah, I am probably overconservative and would prefer that the company was throwing of FCF as well as growing because the next seven years might not be as good as the past. Though to be fair you said "prudently allocate" ;) Take care

I never said that. I wonder why you think I did. The fact that I subtract growth capex from FCF does not mean it's necessarily wasted. It just means that for that particular metric I want to know how much cash company can put in the bank (or spend on buying cheap stocks ;) ). I also look at other metrics so this discussion is rather misdirected IMO. :) Ideal company does not necessarily make ideal investment. There is always a question of price. ;) Securities of very non-ideal companies may result in better returns than securities of ideal ones. Long term, sure I probably would love something like AAPL or MSFT in the old days. However, I'll admit that I am too cheap and I usually don't buy the ideal companies when they are young and growing fast. BTW, looking at this board, I have a feeling that there's not much discussion of organic FCF-for-growth-capex companies either. Mostly I see people talking about rollups or special situations. Maybe this is misperception though.

I'll +1 this.

Yes. Assuming. Most managements' growth capex is not producing the same return as the first. Even for best companies. Even for Buffett companies. It is very hard for large companies to produce the same ROIC on incrementals. I'm pretty sure KO has not produced the same return on growth capex for ages.

And of course the company magically is in the business where it produces exactly the cash flow that it can reinvest into the growth of the existing company at the same ROE. This is possibly true for small growth companies. Actually they probably produce less FCF than they could reinvest into their growth. So they are not that good according to you? Haha. Any company can do that if they have a capital allocator at the head. So you are saying that Jobs should have hired Buffett wannabe to allocate his FCF and AAPL would have been perfect. Edit: BTW, your "prudently allocate ... via ... partial purchase on the public markets" would not be considered capex or acquisition. So you are actually saying that ideal company could be "throwing off FCF". ;)

There are doubts. Why would NATO risk nuclear conflict for Lithuania? But if they don't, then NATO becomes meaningless. And it would be an invite of further Putin expansionism. Where would it stop? Will we have a replay of pre-WWII scenario? It's not that cold. The climate is like US Massachusetts mostly. More rainy though and bigger day/night seasonal swings (long nights in winter). But you have swamps, zombies, cannibals and Russians. But then I repeat myself.

No, but Hannibal Lecter was. Depends on NATO response or lack of such. Yeah, come over and have whatever we are having. http://www.globalpropertyguide.com/Europe/Lithuania/Taxes-and-Costs Not sure if this is correct. I have couple for sale if you're interested.

Trolling much?

FCF is just one of the tools I use for valuing company, obviously. I look at sales, sales trend, P/S, earnings, earnings trend, P/E, DCF, Discounted Earnings, E/EV, etc. Plus qualitative factors: management, business area, etc. Regarding FCF, you somewhat answered your question yourself: would AAPL at Jobs's time have been bad investment because it could not reinvest all cash back into business? Was FCF for AAPL useless metric just because it showed accumulating cash earning nothing? Would you have preferred if Jobs plowed that cash into subpar businesses to diworsify? OK, AAPL and Jobs are possibly extreme examples, but there are others. ;) Another reason (related to above) for looking at FCF: cash is power, cash is optionality. The fact that management does not plow it back into business right now does not mean they won't use it later to buy back shares, buy businesses for cheap, get through a downturn (like Buffett said about GM, I believe that they should keep cash instead of bowing to activists and buying back shares), etc. Sure, management can blow up cash, but they can blow up growth too. So if we trust them with growth as you suggest, perhaps we should trust them with cash. I have passed on Cimpress and Outerwall. This does not mean they won't be good investments. In case of Cimpress, I'd like to see better capital allocation (if management is spending CF, it should be spent well). I appreciate their candor of indicating that past acquisitions did not work well. Numbers don't work for me personally, but I have no issue if they work for you. In case of Outerwall, I don't usually invest in declining businesses. Also I don't think their management is good. But we should not make this thread about specific companies IMO. Peace. Edit: maybe short answer would be: ideal company would be growing and throwing off FCF. Such companies are few and usually very expensive though.

Why ask questions if you already have all the answers? What's the point?

If I plan to invest, I calculate it myself. ;) According to my definition, total capex and acquisitions should be deducted. But I guess some people define it differently. So I just have to do the work myself. ;)

More liquidity? I converted to LILA from LILAK (also means I have 1 position less on the screen)