Jurgis

I think people are being too snobbish when they call Barron's articles kiss of death. Barron's has good ideas. One thing that is an issue is that they succumb to PE creep. If in 2012/2013 they were looking for 20-50% upside on a stock with current 10-12PE, now they are looking for 20-50% upside on stocks with future (2016) 15-17PEs. OTOH, Barron's kicked out the PCP CEO from top CEO list this year, so buying PCP is contrarian to Barron's kiss of death, no? ;) Disclosure: I have small position in PCP, not buying, not selling here. I generally like Barron's. Can't stand Donlan editorials though.

Oddball, some things I agree with, some things I disagree. Correct. No, I don't. I agree with you that you have to sell the product for it to be successful. But this does not mean that I should want to sell the product. I make a conscious choice not to go on paths where I would need to sell the products. And, yes, I am aware that even if I am a programmer, I still need to sell myself and things I do, etc. I am also aware of the fact that if I went on the paths where I sold the product (or myself) aggressively, I'd probably have made much more money than I did otherwise. So you live your life and you make your choices. :) Some people are fine with limited selling to friends and family and with limited funds that raises. That's their choice. (There are products, investors, etc. that are so good they sell themselves without effort, but that's usually an exception). Just be careful that you don't look too pushy cause that's a big turnoff. ;) Not true. I am looking for 15% a year. FoF is a piece of garbage. Luckily they are sold to people who can afford garbage. :)

This is a tough question for any (value) investing approach. You can try to estimate expected return and compare it against expected index return. Both both of these estimates can be out of whack. In general, if you buy owner operators sufficiently cheap and their business is good (enough), their compounding should outperform the index compounding. The issue is that good owner operators being really cheap might correspond to the index being really cheap... At this point in time, I think index is somewhat expensive while some owner operators are still reasonably priced. Does this guarantee outperformance? We'll see. One concern I have about Horizon Kinetics and FRMO is that theories don't pay bills. They may have great theories and writeups that I like. But if execution lacks, the good theories are not enough. There are tons of people in Wall Street with good theories, usually contradicting ones too. ;) Disclosure: I own a position in FRMO. I am not adding or selling at this time.

Another venture for oddballstocks! :)

Schwab711, yes, I agree. 8) +1

Possibly. If Prem stays as CEO until 2025, I don't care until then. If Prem dies tomorrow, I'm gonna sell my FFH shares no matter what anyway. So sure this might not be the best thing to happen, but Prem goes out of his way to make it as shareholder neutral as possible. He freezes his salary, he promises to stay until 2025, he promises no special benefits for supervoting shares in all scenarios. I think these are adequate promises for me to accept what he asks for. Other investors can decide for themselves. If Prem's press release does not persuade you to accept this, then I won't be able either. :) So I won't even try. ;)

I fully support Prem on this. 8)

Ben, I pretty much agree with your post (again ;) ). The following is OT perhaps, since it's just my personal experience and it might be irrelevant. :) I don't talk to my family and friends about investing - with some exceptions - for the following reasons. Some of these I think are cultural and I tried to mark them as such. There is some generalizations here - clearly this does not apply to everyone. - Envy. "You are investing, therefore you must be rich like heck." This is mostly not an issue with Americans, but it is an issue with Lithuanians. This leads to expectations (see expectations bullet) and other difficulties. It's better not to touch the subject. ;) - Expectations. "You are investing, therefore you must be rich, therefore you should do XYZ for me". This applies both to Americans and Lithuanians. ;) Americans are usually nicer about this, they sometimes just mention that perhaps you should donate a large amount of money to some cause - especially if you meet them through things related to that cause. Lithuanians (family more than friends) expect that you just give money to them. :) - Misconceptions. This is a long list: "Investing? Stock market is casino/rigged". "Investing? Why not buy index funds?" - actually this one is one of the better ones that aspiring money managers should have an answer to. ;) "Investing? I bought AAPL stock and have 10X return so far. What? You only did 14% per year? And you call yourself an investor?" "Investing? Day trading with TA is where the money is!", etc. This is where I can't find a good word to describe myself. It's not "introverted", but I really don't like dealing with all of these. :) I don't find it fun to spend conversation with a friend trying to persuade them that they have a misconception about investing. I'd rather talk about movies. ;) - Professional expectations. I did not get much of these, since I don't manage OPM and I don't talk about investing a lot. But this is where you hand-hold your clients/friends. I'm fine with helping them a bit, but I don't want that to be my 24/7 work. :) This includes things like: "I'm not doing anything with my money, what should I do?", "The market is high right now, should I wait for correction?". And things like: Company XXX has ESPP that gives a guaranteed 15% return - and the person is too uninformed, lazy, scared, whatever to put money into it. Company YYY has 100% matching on 4% contribution to 401(k) and the person is too uninformed, lazy, scared, whatever to put money to get the match. And these are the things that would give them higher return than investing with me. :) So, sure I tell them to do it and then a year later they still have not done these things. For me, that's a killer. :( A good money manager would not care about these things or would care just enough without getting involved. I can't do that, if I care, I care too much. :) Anyway, as I said, this might not be quite relevant to the topic. :) Peace

Yeah, their outperformance recently has been lacking.

41.8% is probably not a problem. The problem is that this will continue to drop if they continue issuing shares. So this is a proactive change, not a reactive change.

+1 on this. I really hope that we won't have to experience this in our lifetimes. For a while it seemed that we won't but with rise of Putin's Russia I can't be sure anymore.

With my +10 on your post, I'll quibble a bit with this. I never seriously tried to get OPM to manage, so this is a bit second-hand, but it's also not totally theoretical. :) I think your sentence above assumes that the investor comes from a well-to-do background with family and friends having a significant amount of money to be invested by the said investor. It also assumes that the investor is not shy/introverted (not sure what's the good word) to promote themselves to their family/friends. And also that they are comfortable to manage the money of family/friends with everything that this entails. I think all these 3 assumptions are not necessarily true: - Some people come from backgrounds where family/friends don't have enough money for them to start any reasonable business. It's possible to change the circle of friends, but getting friends who will trust you money will take time (and promotion ;) ). - Some people are not good in selling to the point where the track record does not matter. Sure if they do 50% a year, they might attract money. If they do +3-5% over benchmark consistently, they won't. - Some people don't like to mix money with friendship. (Some people think mixing money with friendship is not an issue, but behavioral economics shows that it is). I would not manage money for my family/friends even if they asked me. ;) Well, maybe if they asked a lot. ;) Having clients who are at arms-length might also be a positive thing for some investors. But having such clients requires promotion. So I think your claim above is not universal. :) Take care

Great post, Ben Hacker! Covers a lot of ground. +10 at least. 8)

Sure, up to certain size big can be better. Also depends on what the manager does and how they do it. Einhorn's recent results are subpar. We will see how he does in the future. BTW, Stan Druckenmiller warns about 10B IIRC asset level as being dangerous. /shrug

Good for the manager, but is it good for the clients? ;)

Great video.

Great talk. Some notes paraphrased: - Biggest issue with investing in emerging markets: currency. We have not found a currency manager (as opposed to investment manager) with a good long term track record. Not hedging might be bad, hedging might eat away your returns. - Most creative accounting is in US, since companies want to overstate earnings because compensation is keyed on earnings. - In Europe (some countries) family owned companies understate earnings since stock runup triggers wealth tax even if family does not sell any stock.

+1

I don't think that probability of success is 50%. I think it is (much?) lower. But I admit that I don't know a good way to estimate the probability. :)

There is a simple explanation for this: aliens are eating our fish.

HCC is insurer not reinsurer. I have looked at HCC in the past - they had really good results IIRC - always traded at a premium to book, so I did not buy. I don't have a full analysis of HCC specialty lines. I may be prejudiced, but Japanese acquirers are not necessarily smart money... can't expect others to follow suit.

Pretty solid, but at least 10 years too late. China wages are going up a lot and the China-deflation has pretty much played out by now.

If you use 10% discount rate, you need about 12-14% growth for 10 years to justify current price.

I am not a lawyer. Merkhet, the explanation might be as follows. Maniere is not silver bullet for government since it does not resolve the issue. It only changes one set of plaintiffs for another set. Government would rather get this thrown out totally. So that might be the reason why they did not go Maniere up till now. Or incompetence. ;) (BTW, in class action cases against companies the beneficiaries are stockholders through a certain period when damage to stock price occurred. So stockholders who held stock at that particular period benefit and not the ones holding stock later/currently. Since I am not a lawyer, this may be irrelevant here. ;) )

Although I mostly agree with you about Picasso (the painter, not the poster here :P ), some of his stuff was good before he went off the deep end. I think there was some story a few years ago of family selling their 3 year old daughter's (?? I don't remember details ??) paintings for tons of money. So yeah, art is a lot of promotion. But then you don't like every book or every movie. I'm sure there are books/movies considered to be great that you hate. Why do you expect to like every painting or sculpture? ;) OTOH fortunately (or unfortunately - I'd love to buy some cheap) the great old masters and Impressionists also sell for tons of money. So some people still have good taste. ;)