Gregmal

Ive followed and owned this forever but my issue here is that at some point it seems that there is just so much money here that evil instinct will kick in and turn this into just another company. What I mean is that part of my original intrigue was that there is no real management, no business, no nothing really. Just sell a little land, buyback stock, and that is it. As the company's assets have proved dynamic and profitable to a greater degree than any expected, now all of a sudden you have operating businesses, G&A cost, proxy fights and people making business decisions that could backfire. Not sure how I feel about that.

Added as well, just as I did after last quarter's "miss" around $1100... I continue to like this, and continue to think its great(for an investor looking to build long term wealth here) that the market seems to have such low expectations for everything else, including stuff like FB and AAPL, yet wants to be so petty and nitpick with GOOG... Good, I'm getting to buy one of the best companies in the world, wildly profitable, growing like a weed, and still attracting the smartest people in the world...for a huge discount to everything else.

IDK guys, but Bruce and Sears has to take the cake. Others lost more dollars, some read it more wrong, but the sheer combination of surface confidence coupled with utterly outlandish price targets and conviction that great escaped a reality that many simpler folks had no trouble seeing... hard to top that. Then add doing that for a fucking decade and even at $5 per share still putting up triple digit price targets....

Here's the million dollar question... Is it a million free and clear of taxes owed? In other words, the liquidation value net of tax? Either way, congrats.

Bass regularly makes wild and spectacular claims(in dramatic fashion) that when they play out leave everyone thinking "wow, this guy is a genius", and when they dont are quickly forgotten. Its a unique marketing strategy but as has been alluded to, I am not sure how much money he is actually making.

https://seekingalpha.com/article/4256779-cleveland-cliffs-inc-clf-ceo-lourenco-goncalves-q1-2019-results-earnings-call-transcript?part=single Lorenzo is the freakin man. Total Outsiders CEO Just one of the few great pieces here: "Lourenco Goncalves Look, we are not going to talk about second HBI plant until we have the first HBI plan up and running and IRR accomplished and money in the bank. Remember, capital allocation is an exercise of optionality. At this point in time, the best IRR that I can get in this company is not building our second HBI plant, is buying back my stock. It's obvious that, if the market continues to deny value to our equity, the market in the stock exchange every day, I'm going to continue to buy back stock. And the domestic US market will starve for metallics. They will beg for me to build a second HBI plant and the second HBI plant is not going to happen. Because it's -- again, it's an exercise of optionality and allocation of capital. Our second best use of capital right now would be paydown debt. And we proved that every quarter, it’s not just speech. Remember, we bought $124 million of stock in Q1, and we bought back $10 million of debt. So it's hard for me to tell you that buying back debt and buying back stock is at par, they're not. Buying back stock is a lot more rewarding for the company right now than buying back bonds. HBI next, while we have one in the making. And you know well Curt, I like shortages. It's good to start with a shortage. So HBI number 1 is reality, we are gearing up to start to deliver great pellets to Toledo. But we are not in a hurry to build HBI number two."

Thank goodness.

Rumor out that Warren is trying to buy PG&E... totally worth the wait....NOT. I dont have a meaningful enough BRK position to be mad, but this just continues to fit in with what I've now thought about for the past few years.

Yup, yup.... this and LGI Homes (the not so pretty one) up massively in a few months. But value investing is dead...

As has been discussed a million times, I think these things just become excuses for certain "types" of value investors. I know several value investors, just amongst my circle of friends and contacts who are not having these issues. Carl Icahn is a value guy, amongst many of his strategies, and he had the fore site to see Netflix was mispriced. I think Bill Ackman is an example of a value investor who finds a few value traps, but typically employs a value strategy; look at what he is doing this year. Value doesn't work to me is a bullshit excuse/ quasi mea culpa from people who just aren't able to generate alpha. Some self proclaimed value investors I know would rather generate crap returns and keep their "value investor badge" than be flexible and generate respectable returns. It's crazy. I mean who says just because you buy a low PE name in a troubled industry you are entitled to outsized returns? More often than not, when I find people claiming value doesnt work, it is because they have in their head this mold of what "value investing" is and refuse to deviate from it. As such they continue to find themselves in the same type of investments and plagued by the same type of problems. The biggest value investment payoff I've seen in the past half decade was Straight Path. How many "traditional" value models did that fit into? Successful value investing is often a product of understanding the times. Buying yesterdays textbook "value" investments has never really worked, but this past cycle people seem to think it should be different.

This is a personal view, but the 15% is now being expressed as 95% CR and 7% return on investments. I see no issue in targeting those metrics over the long term. What they've achieved in the past doesn't have to be a guide to what they aspire to in the future, especially when they've sworn not to repeat the biggest mistake of all (the huge naked hedge). That said, I couldn't care less that they target 15% and I find it surprising that people on here focus so hard on it. That's not a criticism, it's just that I have never had the sense that they manage towards the 15% goal in a bad way. Their mistakes are plenty, but they are so long term in approach that personally I don't think the mistakes stem from stretching to get to 15% - and that's the main negative of having a public goal. So I just ignore it, and focus on whether I think 95% and 7% are achievable (probably and probably not, respectively) and whether I'd be happy owning Fairfax at the current price if the ROE was say 10% over the long haul (yes with bells on). I regard the 15% ROE as an aspirational goal at this point. What irks me more than FFH not even close to reaching this goal is the increasing share count (by 2.4M shares last year) that shalab pointed out. It’s even more irritating with all the talk about Singleton and quite frankly, it looks like he is talking one thing and doing just the opposite. Did someone ask a question regarding the share dilution and how it squares with the talk about buybacks? There might be a good explanation for this, but it’s odd that it’s not addressed in the annual report or in the shareholders meeting. There is a certain personality/salesmanship type that follows the below playbook; Tout positive events Spin mid spectrum events in your favor Ignore bad events There is an even more unique type that can take that last one and without guilt say it is actually something different and wholly positive. There is no tolerance it seems, from many when a certain businessman, now politician does this sort of mind trickery, but it appears there is still tolerance for it on the investment front. It is my belief that no profitable business trading below IV should ever be issuing shares. Period. Maybe, and only maybe in very minimal amounts, to certain key employees, but thats it. There is no excuse here.

The above quote from Liberty is great and all, but the perspective really differs depending upon where you are in these "projects"... If you are the guy "getting to play Buffett" for a bit, and getting paid to do so, is this not like the greatest thing ever? On the other hand, if you are the sucker(shareholder) funding this adventure with your capital... well, I'm not so sure they are typically the best investments. This is just a classic case of an investor needing to do thorough DD or otherwise just stick to indexes or whatever. Feeling bad for the guys running these is like feeling bad for the fringe NHLer. Dude is living the fucking dream. Running one of these has to kind of be the geek equivalent of what it's like being a jock who dreams of playing pro sports. And then makes it. If you can pull it off, good for you. If you are an investor, think with your head, not your heart. Simple as that.

Oh Look, JPM is A-OK...shocking

Whenever there is a big, unique case or event, many times the ripple effect is that people end up seeing future things/events/cases in a manner tainted by that event. Whether it be the GFC, or on an individual scale, Valeant, there is always going to be a story that sells, built around something else being "the next (insert GFC, housing bubble, VRX, etc)". But from experience, the next "GFC, VRX" is almost always NEVER the next GFC, VRX.

Greg, Please tell us more about it, when you do your bold moves - when you actually do them. I have in the past. Many work, a few here and there dont(like BHC earnings trade and RSYS merger arb where I posted the idea and was about the only one in the world who didn't make money because I read it wrong). My most recent ones have been actionable, especially gene therapy/CRSPR related ideas and the buy anything under the sun call in mid/late December, but frankly after the preposterous reaction from many here on the MDXG trade I decided it better to tone back the ideas if it was just going to be met with scorn from under appreciative underperformers(likely due to jealousy). My point here is that JPM is the best of the banks and Jamie Dimon is basically God so dont overcomplicate things when it comes to owning JPM.

While I think Carboards remark was satirical in nature, I also think if any a place in the investing forums, it is here, in relation to the big banks where politics is very, VERY, relevant. I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard. But I don't think anyone should forget, these guys do all have targets on their heads. Bigger targets than Zuckerberg and Bezos.

I also think the concern listed in the thread title is mainly relevant for those that just want to be lazy and index everything. If you own high quality, cash flow generating companies that buyback their own stock, supply and demand by itself will create your returns. If not, you are afforded the opportunity to buy shares at a depressed valuation. win/win. This obviously assumes nothing macro happens that effects said company's ability to generate fcf, or on a fundamental basis that causes the company's prospects to deteriorate. But as always those that do the work should continue to get rewarded.

The concerns here and with CVS to me mirror a lot of the sentiment around AXP in early 2016. Different problems, but largely the same unfounded fears and sentiment. The environment may be changing, but these guys and maybe a couple others will be around to shift with it.

Theoretically, if you are gifted enough to at least at some point potentially be heralded as "the next Buffett", what would be easier, milking the shit out of that and making a fortune taking advantage of it, or actually having to live up to it?

Greg, I agree completely. People shouldn't be thin skinned. But censorship wasn't the purpose. It was more to protect the sanctity and purpose of the forum to keep it from getting overrun like every other forum that has fallen due to this exact thing. But you're right, it's probably best to just ignore and move along. Regards, I agree with you and have also said I wouldn't care if politics was removed entirely. But it's here, so for the time being I think people should just learn to deal with it rather than bitch and moan every couple weeks/months... It would be one thing if people were completely turned away, but realistically, are high quality investing minds really allergic to even the sight of a politics topic? I think not. I mean aren't Buffett, Gates, Soros, Zuckerberg, Tepper, etc, usually front and center quite frequently on the subject of politics? Yet we're worried about people who are clearly lesser than the aforementioned names running away from here scared? Please...

I've said it before, maybe even a while ago on this thread or one like it, but there are a lot of babies out there. Many have skin so thin it's amazing they are even able to function in a normal capacity on a day to day basis. Investing and politics go hand in hand, only things missing are whiskey and cigars. If people dont like it, they dont have to pay attention to it. They can ignore it, as there are functions for that. Or they can go elsewhere. There are plenty of forums and communities for investing. If someone is unable to cope with information or opinions they dont like, let them go elsewhere. The main thing to try to keep in mind for those that do engage, is that its nothing personal; everyone has a right to their opinions and beliefs.

I find looking at what others are doing as helpful. For instance, Dan Loeb is waging war on family owned, Campbell's Soup. That tells me quite a bit about what he thinks of the US markets and their expected returns right now.

Take 20-30% in the next week/month and spread it amongst companies/themes you can safely count on to be integral to the system and that will unavoidably benefit from time simply passing. You could also just take that % a buy an index fund, but frankly I think a basket of companies like GOOG, MSFT, BRK, JPM, BA, etc will do way better. I'd throw in a personal favorite, MSG, and maybe some ETF's like CIBR/HACK. There is your "exposure". Then take your time diligently putting the rest to work. But at least you get the hardest part out of the way, which is getting in the water.

Edit to add: When a company consistently screens as "expensive" (say trading consistently above 30x for five years), I'm always skeptical that it is "overvalued". I don't have an opinion on CRM, but there are plenty of recent examples of companies trading at 40x or 50x earnings that were actually very cheap. I agree 100% and utilize the same reasoning with companies that escape my analytical skills. Short term, sure, things can go anywhere. But when something is what it is for a half decade or longer, the odds are that this is what it is. I used to make this mistake, but ridding myself of it helped my ability to pivot into new ideas that otherwise I'd miss. Chances are, if I thought something was overvalued for 5+ years but it consistently trades at that valuation, I am the one who is wrong. The sooner you can come to terms with that the sooner you can re examine your investment thesis. Look at the VIC Wingstop thread. The best thing you can do for your portfolio is to figure out when you are wrong as soon as possible. Not make excuses to continue being wrong.