Liberty

OAK is interesting, but since everybody suddenly seems interested in it (the Gio effect?), I'll point out that in my opinion (which isn't worth much, I know) the most interesting asset manager for the long haul is FRMO (indirectly, Horizon Kinetics). IMO Murray Stahl is a deeper thinker than Howard Marks, and while Marks sits around waiting for distressed debt (which is a good model that works), Stahl sits around and thinks of new clever investment products that exploit structural market inefficiencies, then creates them at basically zero cost, and many of them grow pretty fast, making the fees roll it at basically infinite ROIC since all they invested is intellectual capital. They have an incredible track record, and I expect them to keep innovating and to find ways to make money in both up and down markets for the long-term, and to manage things very conservatively as owner-managers who see FRMO as their long-term vehicle. Anyway, I didn't mean to derail the thread. Carry on.

The thing that I worry about in "less crowded" investment areas is not the competition from fellow buyers, but the motivation of sellers. I think it is incredibly important to understand who is selling to you and what their motivation is. Without that piece of insight, for all you know, you could be the dumb money at the table. Absolutely (though the same thing is just as valid when buying, say, AAPL -- why are they selling?). Value investing stars always say "don't follow the crowd" "think for yourself", "do your own work", but it's actually much easier to follow the value crowd and invest after Buffett, Pabrai or Berkowitz or some great investor on this board has done the work and bought something (cloning, no bonus points of originality, etc). If you go out on your own and screw up, you'll have nobody to blame but yourself.

The way I see it, there can be two ways to make money. One is by getting the big things right, as tede02 just said. Cutting through the noise to see that company XYZ is undervalued and good things should happen to it over time or that company ABC is super high quality and should keep outperforming over time. Another way is to know things that other people don't know because they haven't done the work. So Michael Burry reading CDO prospectuses or some analyst spending a year sorting through Enron bonds might mean that they are almost the only people with that information, because it was hard to find and most people didn't bother. That's kind of the argument in favor of microcaps. They're too small for pretty much all funds and institutional investors, so very few people are looking at them. If you do, you might be one of the very few people with the info, so it's not priced in properly. I don't think these are mutually exclusive.

http://www.streetinsider.com/Analyst+Comments/Reuters+Valeant+%28VRX%29+Story+on+Deal-Making+Taken+Out+of+Context%3B+M%26A+Continues+to+Be+Important+-+Guggenheim/10081254.html

Liberty, One last question if I may: earlier in the thread you have said you are holding 0% cash right now. To imagine you holding 100% cash “on a few occasions” during the last 10 years is hard… I mean, you hold cash only if there is no investment that offers good value… And I can hardly think of any time in the last 10 years in which it was as difficult to find attractive bargains as it is today (with the possible exception of 2007)… So, could you please tell me when those “few occasions” have happened? Thank you! Gio It was non-market reasons. I didn't know what I wanted to own at one point, so I owned nothing. Or I wanted to move to higher quality companies because I realized that fit better with my style, so I cleaned the plate while figuring out my next moves. Stuff like that.

Exactly, and preempting future attacks on the model by definitely proving they are not using m&a to mask problems while strengthening the balance sheet is a good idea. They'll still do some bolt-ons I bet.

Interesting piece on JB Straubel, Tesla's chief technology officer: http://www.economist.com/news/technology-quarterly/21635332-jb-straubel-charged-more-electrifying-californian-carmaker-he

Well, I think it was Vinod who asked how my cash reserve would change if FFH, LMCA, and BH were at certain price levels… Anyway, let may ask you a question: how many times in the last 10 years have you held a significant amount of cash for an extended period of time? My point is: the problem is not to hold or not to hold cash, the problem is those who hold cash tend to always hold it, while those who are fully invested tend to always be fully invested. ;) Gio I've been almost 100% cash on a few occasions, but that's beside the point. We were not arguing that you should be fully invested or not; we were arguing that the decision to do so would be better if not based on unreliable macro indicators but rather on what individual opportunities you are seeing.

Who said it should be static? Sometimes you seem to argue against things that were never said... But glad our arguments seem to have influenced you and that you didn't wait for a lower Schiller CAPE or a happy Hussman or whatever before buying something you find cheap... ;)

I agree, but what I believe NBL is trying to point out is that you have to judge how relevant all parts of the thesis are for the final valuation. In case of Lululemon or Green Mountain Coffee Roast you have to be quite sure about qualitative issues because they are pretty much the defining feature of the market price (i.e. if Lululemon had no competitive edge it would trade 75% lower). But when you can buy BH at the price of cash + CBRL stake basically the only important question that you have to ask is: is CBRL fairly valued? Everything else is worth at least something and whether that is $100m or $300m is 'only' the difference between 40% upside and 60% upside (just jotting down some random numbers). I think that's a refreshing way to look at BH. And I agree that in general in this topic we are too concerned about the menu that SNS is serving, the jet Biglari is flying, the happiness of franchisees, etc. (I plead guilty too). Stuff that is extremely hard to judge and will influence your price target by +-5% at most. Yet what is the last time somebody tried to peg a price on CBRL? The last update in the CBRL topic was posted almost two years ago. I don't disagree. Just saying that discussing that stuff is discussing value. And since it's qualitative, it'll have more or less weight in different people's valuations. Some people might not mind too much some unsavory aspects, or even the appearance of them, while others wouldn't touch them with a ten foot pole. The former can't tell the latter that their approach is the 'right' one or vice versa. People also buy for different reasons: It can matter a lot whether you intend to buy something undervalued to sell it when it reverts to the mean, or if you intend to hold it for a decade+ as a "partner" in the business.

Do you have a link to it? https://variantperceptions.wordpress.com/2012/01/19/bank-of-america-big-improvement/ http://variantperceptions.wordpress.com/2010/08/29/francis-chou-on-large-bank-warrants/ http://variantperceptions.wordpress.com/2012/04/01/tarp-warrants-let-every-eye-negotiate-for-itself/

Liberty - I do often think when reading posts/writings elsewhere about various companies, that investors would just focus on value! value! value! and not peripheral issues that are only slightly related to value or unrelated entirely to the value/price of the given company. Perhaps I should not have let that thought you referenced spill out on the page though. Issues related to management, business strategy, brands/moats, etc, are directly related to value. Value isn't just the numbers on the page, it's also a lot of qualitative stuff. A cable company doesn't have the same value if its run by John Malone than if it's run by some random MBA.

http://www.nasdaq.com/article/activist-fund-valueact-capital-to-seek-up-to-15-billion-from-investors--update-20141205-00423 ValueAct raising $1.5bn.

Might be just me, but I think sharing short positions is the same as sharing longs. It might not be perceived the same way socially, but financially it's the same. And I think this forum is sophisticated enough to not take the layperson view that "shorts are bad guys who want to see America fail" or whatever. Michael Bury's a hero here in good part for his short bet. Shorts provide a useful service by uncovering frauds and pointing out overvaluation and such. I wish we heard more from shorts, even if it's not something I feel comfortable doing myself. Maybe others have a different point of view, though. But I'll point out that there are lots of short ideas posted on the VIC and it doesn't seem to be a faux pas.

Why?? This is not a value investing perspective at all. I do not want to like or dislike any stock, as it is irrelevant. I would think that most value investors want to be impartial on every stock - which is to say not inclined to like or dislike. This seems unfair. You interpret what is said in the way that makes it sounds the worse. Instead, how about giving the benefit of the doubt and interpreting it in the best way? I think he said "I want to like this stock" because he sees a lot of things to like in it, but in the end can't like it because there are things that he dislikes that get in the way. "Like" can be shorthand for the balance result of a carefully researched list of qualitative and quantitative pros and cons about the business. That seems more likely than some irrational predisposition to like a stock. Are you short BH? This is language typically used by people shorting a security rather than value investors. What?! This is language used by someone who has weighted both sides of the question and is aware of the main arguments against his conclusion. This seems like an unfair attack once again (both about being a "secret short" trying to manipulate others, and about not being a "true value investor" (let's call the value investing police?)).

http://dealbook.nytimes.com/2014/12/05/jamie-dimon-says-no-evidence-of-cancer/ Happy for him!

I just liked it better, but think he's generally boring and long winded. He reminds me of writers from the 19th century when people had nothing to do other than read a book that was 3 times longer than it should be and was a combination of story, travel guide, etc. In Business Adventures, the Edsel chapter almost killed me. About 60 pages and nothing happens. Here's the synopsis - it was a crappy car and they didn't research it properly or roll it out properly. He just seemed to go on and on about uninteresting stuff, giving almost full dry biographies for random people tangentially involved in the action, and he tells you about a lot of things rather than showing them to you via dialogue or action (Michael Lewis can quickly let you know a lot about someone just by showing you the way they talk and describing them in action). Maybe it's just the writing showing its age... Business writing had to start somewhere.

I didn't like Go Go Years too much. Don't care for the writing and what he decides to focus on... The events themselves sound very interesting, though. I shouldn't have ordered three books by Brooks at the same time...

Down over 16%. "Starz is considering alternatives to a sale after reaching out to potential bidders who passed on making an offer" http://www.bloomberg.com/news/2014-12-04/starz-said-to-consider-new-options-as-it-fails-to-find-a-buyer.html

On the lighter side... http://boingboing.net/2014/12/04/amazon-mails-customer-conveyor.html http://i.imgur.com/Nm1FIWM.png Amazon says they have to mail the roller back or they'll be charged $19 for it...

What if the things that were bought had goodwill on their balance sheet, and they themselves had bought things that had goodwill, and so on... Goodwill all the way down!

That's one way to test your high-DPI monitor..

Me? About the code? I was just curious because that's not HTML code, so there's something weird going on that is trying to convert HTML to BBcode.. Are you using a strange Amazon browser that is full of bugs? ;) As for the rights, the benefit of the uncertainty about the offering being cancelled can be good for those who want to buy extra rights because the higher that perceived uncertainty is, the lower the rights will be priced in the secondary market.

I believe they are referring to people who buy rights in the secondary market, not those who receive rights because of Liberty Broadband shares that they own. The money lost would be the money paid to someone else in the secondary market, not the money paid to the company to exercise the rights. Off-topic: Do you use a weird browser plugin that tries to convert HTML to BBcode when you cut & paste, JAllen? Your messages are often formatted weirdly with lots of superfluous code. No big deal, but it's making me curious.

Ha, yes! More like online gambling, even, since you don't even have to build and operate all those expensive casinos ;)