Liberty

Even Jim Cramer, who attacked Valeant and repeated a lot of the Allergan accusations a few months ago, now praises the company: http://www.thestreet.com/story/13056503/1/jim-cramer-on-valeant-this-is-an-amazing-pharmaceutical-firm.html No sure what to think of this. Oh well, it's not because the village idiot says the sky is blue that it's not blue...

LOL. Maybe you guys can ask him how can he lead a fairly stress free life while running one of the largest companies in USA and periodically running into near-death corporate situations (Washington Post strike in 70s, SEC investigation in 70s, Salomon Brothers debacle, Gen Re debacle, Net Jets debacle, death of all the "made in America" brands he bought, Lubrizol and Sokol, etc.). I would have killed myself multiple times during his career. "Stress free" my a** ??? ::) :-X :'( :o The way he's set up his life, these stressful moments are pretty few and far between, and he seems to take them with great equanimity (he always says more problems will happen, will just have to deal with them, etc). He does exactly what he wants to do each day, as much as possible only associates with people he likes and respects, his schedule is mostly free so he can read and think and do whatever he likes, he lives close to work and has an entirely predictable routine unless he decides to change it (media tour, etc), the fortress balance sheet and operational diversification means he never has to worry about downturns (in fact he likes them because he can buy more stuff). I'd say he's probably less stressed than the average wage slave working an office job. That doesn't literally means stress free, but it looks like a damn good system he's set up.

http://www.reuters.com/article/2015/02/27/us-icahn-results-idUSKBN0LV1X320150227

http://www.telegraph.co.uk/technology/apple/watch/11439847/Apple-Watch-will-replace-your-car-keys-says-Tim-Cook.html

If at 200 they're trading at 12.5x 2016 (and that might be conservative if history is any guide), imagine if they had issued equity at 150-160... Madness. Not for nothing they were talking about buybacks a few months ago. You don't buy and then issue. But now if their stock rises and markets sees the AGN attacks were BS, they might attempt another merger of equals at some point (2-3 years?) and use more equity for that.

I misread the original quote. The key part (that I missed) is highlighted below: IBC does not accommodate asset swaps or transfers in kind (cash or securities) from a cash or margin account at IBC or elsewhere to an IBC RRSP or TFSA account at this time. So it doesn't say they won't take a transfer-in-kind from another RRSP account, just from non-registered accounts. And as gokou3 pointed out, they later say explicitly that you can fund your RRSP account with a transfer from an RSP at another broker. My bad. Sorry! BTW, Liberty, the way you link your existing IB account to your new accounts is by logging into Account Management and selecting the Manage Account --> Add or Link Accounts, and then Create Linked Account menu options. Once linked, your new RRSP/TFSA account will benefit from a shared user name, security device, and market data subscriptions. Thanks, that was confusing for a moment. And yes, I got the same email: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/global-trading-in-canadian-registered-accounts/msg212743/#msg212743

Where did you see this? I was under the impression you could fund a registered account by a transfer in kind... Update: just saw on the page linked at the end of the email. But the email says you can fund with securities transfer. Can anyone who actually did it confirm if it's possible to do and in kind transfer from an outside account?

http://brooklyninvestor.blogspot.ca/2015/02/jpm-investor-day-2015.html

I just received this email from IB Canada:

This, plus reading and thinking this much is very good exercise for the brain. Doubt he'd be doing as well with the same stress level, but instead sitting on the couch watching game shows.

60Hz is not good enough for you? .... Sorry, engineer joke. 8) Ha! I actually hate people who watch movies with their TV extrapolating frames at 120hz (sports mode or whatever). Makes everything look like it was shot on video for a soap opera :D

Media has been invented to an event on March 9th. Expecting more details on Apple Watch (of course - along with demos of all kinds of cool Healthkit and HomeKit stuff, probably), and with some luck, a new Macbook Air (with retina screen). Less likely, but nice, would be something that people don't expect anymore, like a big refresh of the Apple TV.

Well, I tried.

One of the greats has left the building...

Don't like the debt? Don't buy the company. Problem solved. As for your strawman, I never said I knew everything would work out perfectly. I said that the most likely scenarios were quite fine with me and that I trusted management to be able to deal with problems if they arise, and that things don't have to work out perfectly because there's a margin of safety built in the plan. That's what investing is, it's making decisions under uncertainty with the best information and insights we can muster. If you're looking for a sure thing, go buy some T-bills (you'll be sure to lose money after inflation). And don't make me laugh about wall street pricing this company so efficiently... But what you're implying isn't what I was saying anyway. I'm saying that over years, if I see red flags like their process/model drifting, capital allocation discipline drop, etc, I'll consider selling. I wasn't talking about outfoxing the street by selling the day before earnings because I can successfully predict stuff that they can't. To me this is an investment. I expect this company to be worth a lot more in 10 years because they have a great model, great management, and great assets. If you're so scared of prices falling temporarily, or don't think the assets/model/management are good, then don't invest.

No I haven't. Thanks for pointing it out. I'll take a look see. By the way, what did you find interesting about ROIC and growth? Not easy to summarize right now, and I'd have to go over my notes to see what came from that book (because I've incorporated it into how I generally view things, but some things came from other places, and I have my own take on it). I just remember finding it really interesting and well explained (very systematic approach). If the topic interests you, I think it's pretty safe that you should enjoy it, unless you are already so advanced and your study of ROIC is so esoteric that you'll find the book too basic... But that's for you to decide.

Berkshire101, have you read the book "Valuation" (5th ed.) published by McKinsey? I found really interesting things about how to think about ROIC and growth in there.

Does their FCF/share numbers over the past decade look good to you? These capex numbers are enough to scare me...

Very good post, Schwab. The whole revenue-passenger-mile story + aftermarket + sole-source dynamic is incredible, in my opinion. Heico sadly doesn't have the amount of sole source that TDG does (I couldn't find the exact ratio, but they clearly don't focus on it as much, and their lower margins are probably a proxy for that), but it's still worth a look. Heico is one of my second-tier ideas, but I wanted to share it anyway. I just thought it was too bad when tumbleweeds blew through this thread because I was curious to hear what others thought, and figured maybe they could make me see things that I had missed about the company.

http://www.oddballstocks.com/2015/02/but-why-arent-there-activists.html Great post by Nate. Good reminder in the first part about the difference between theory and practice, and very interesting case study in the second part. Check it out.

http://ir.libertymedia.com/releasedetail.cfm?ReleaseID=898377

http://ir.libertyinteractive.com/releasedetail.cfm?ReleaseID=898376

I was getting closer to 175m FCF TTM, but I just did it quickly so maybe I'm wrong.

With these businesses (though I know TDG better), the money is made on the aftermarket parts. As long as planes and helicopters fly, you need the parts. One of the reasons why I prefer TDG is that almost all their stuff is sole-source, hence no competition and EBITDA margins of close to 50% :)

Out of curiosity, what multiple of FCF would you consider paying for it? The business earns about 13-15% return on capital. So on paper that's how much book value (including dividends paid and share repurchases) would grow by over the long-term. If I'm happy with 13-15% annualized returns over the long-term then I would pay around 15-17 times free cash flow. It's trading for around 23 times I believe. What about you Liberty? I didn't redo the math, but when I first looked to write the original post of this thread, HEI.a was selling for about 18.5x TTM FCF. Probably a bit lower than that now (HEI is more expensive than HEI.a despite only difference is having votes). They've been growing FCF/share at around 20% CAGR for 10-15 years (faster than that past 5 years). IMO Paying under 18x FCF for that isn't very expensive. But as I said, I prefer TDG. I think the traditional ROIC calculation can be misleading for these types of businesses. TDG only has low teens ROIC, but they have goodwill that doesn't need to be replaced and one-time restructuring charges, etc. This muddies the picture. If you look at Greenblatt's ROIC measure instead, HEI is closer to 55% returns and TDG is in the 120-130% range. That doesn't tell you what your return will be (IMO FCF/share growth is a better measure of that), but it tells you a lot about the quality of the underlying business if you put aside some of the noise.