Liberty

I find the lack of buybacks very puzzling. edit: Transcript URL: http://seekingalpha.com/article/1823562-ebix-management-discusses-q3-2013-results-earnings-call-transcript?part=single

Live Nation Q3: http://www.prnewswire.com/news-releases/live-nation-entertainment-reports-third-quarter-2013-financial-results-230707351.html

I also got this: http://goincase.com/shop/incase-origami-workstation-for-ipad-2 (I already had a wireless Appel keyboard) It's great. Feels like a laptop. That's the only thing that bugged me with the iPad. Once in a while, I want to write detailed notes while sitting comfortably on the sofa, but I don't want to use my laptop because the iPad is so much nicer.. Now I just sit the iPad in that thing and boom, instant laptop with full-size keyboard.

Received my iPad Air today, one day ahead of schedule from what Apple estimated for shipping. I have to say, I now understand why they changed the name to "Air". It feels ridiculously light, yet solid. My iPad 3 now feels like a brick. It's super fast, feels really good, and basically just makes everything that was good about the iPad better. I think that it will sell very well, especially once people can try one from a friend or in a store. I'm sure the retina Mini will sell really well too, but now at least the difference is more like between the Macbook Air 11 inches and 13 inches... You pick based on what works better for you, rather than making tradeoffs between speed, screen resolution, etc. So any iPad is Best iPad now, which isn't a bad thing :D

Sadly, there is no sense in the market and while I understand that people expect the market to make sense in the long run (weighing machine and all of that), I often think of Keynes' admonition that the irrationality in the market can last longer than the resources (or patience here) of the investor and this is why I have a personal predeliction towards BS safety with a catalyst, which I do not see here at the moment. I do hope things get better asap for those invested. Cheers! That's absolutely correct, though what I'm trying to be patient for is the business, not the market. I feel like it would be a mistake to sell before this asset is fully operational. Maybe it was a mistake to buy something that wasn't already fully running in the first place, but now I can't do anything about that and I just feel like I have to at least be patient and see what it's like once it's fully ramped up. It probably can't be worse than just before it reaches cruising speed... If it turns out the business becomes better but the market is still depressed, it'll be easy to be patient. What's hard is when you don't know how the business will do and the market is depressive...

Trivia: The stock is now 39% below its IPO price in 2007. I get things look bad, but does this make sense for a company with 136 million in cash and two plants that, in more normalized/mid-cycle conditions, could earn quite well? Lanquart certainly wouldn't look like such the problem child if the Swiss Franc was at more historical levels... I know that's not under management's control, and that you can't bank on "ifs", but it's probably not crazy to expect a reversion to the mean at some point.

This makes me think that they had a pretty good idea they would get at least some kind of tarriff, and so it was smart to wait until that was announced to do buybacks (if any).. It both reduces uncertainty about the future and probably tanks the stock, so no reason to buy before.

I noticed that on the debs. Pretty big volumes, yet prices are holding.. I can see a few scenarios that could explain that, but have no way to verify which one is correct. I guess time will tell..

This company sure never gets it easy. First question that comes to mind is, did China just kill a lot of DP supply? If so, wouldn't that make DP prices rise? If they rise by more than 13% because of this, it could compensate for the tariff.. Still, any way you look at it, this sucks. I wonder if they've had any luck finding non-Chinese buyers? It looks like cotton is up 3% today. Might be unrelated, but maybe this is a reaction to the expected drop in DP supply...

Then it starts to become a circular argument- these CEOs are good because they are good. I think that you have to be careful with well-written books because some of the ideas may be false. You should try to look at the opposite side of their arguments. Strong ideas are ones where it's hard to argue for the opposite side. I'll leave it at that. I'm on board with the 'halo effect' and I know it's dangerous to look after the fact at how management is described. Something to be very careful about. But I'm also on board with Buffett and Munger and I know that it's possible to identify good businesses and good management. They've done it pretty consistently, and they've said a lot of what they look for. I agree with your approach, I just don't think it's as simple as taking one aspect and grafting it to another random business to see how it does. A lot of these things work together (nobody said it was simple). To me, the book was interesting because it feeds the pattern recognition engine and reinforces a lot of what Buffett has been saying. Good management is long-term oriented, it looks for businesses that throw off a lot of free cash flow that can be re-invested opportunistically for good returns (that can be buybacks if your stock is undervalued and you have a good business, it can be acquisitions if you're in an industry where scale gives big advantages, or a portfolio approach to investments, buying unrelated businesses that have certain characteristics, etc), it requires patience and discipline, independent thinking, the ability to be misunderstood for a long period of time, etc. Nothing that was a secret to anyone before, just some nice case studies.

I don't think his argument is just that buying back shares is the secret, though. The outsider CEOs all had many other tricks in their bags and knew when and how to use them. The best tool for the job depends on the state of the business; what's best to do in your examples would depend on why the net-net is a net-net and what its prospects are. You can't just abstract it all to just "net-net + buybacks = outsider performance?". I think it depends on the business, but of course being both is even better, and I never got the feeling from the book that being a good operator (of having them under the CEO) wasn't important. Only at the very beginning, though, right? That's not Malone's fault at all. In fact, he's the one who was brought in to solve the problem and without him it probably would've gone BK. Indeed, but the real question is, was his strategy best for the long-term, and was he ever in danger of totally blowing up. I don't know the details, so maybe he did come close, or maybe he just had to sell some stuff that he didn't want to sell, but he was still fine (and a few years later, he's definitely fine). You can look at this a bit like volatility. Even a company as safe as Berkshire went down by 50% at least three times. The quoted value of Malone's stuff will go down too, and because of his strategy, he might sometimes be forced to sell some to meet margin calls, but if overall that means he makes 30% a year over the long-term with billions relatively safely, it might be a valid strategy. The BK is not Malone's fault, though, is it? Charter was mismanaged for years and Paul Allen paid way too much to build it up in the early days. Malone's just value investing by picking up an asset with a high replacement value for a low cost and then running it with the best operator in the business.

HBR interview with Bezos (audio and transcript) from earlier this year: http://blogs.hbr.org/2013/01/jeff-bezos-on-leading-for-the/ Interesting, he quotes both Buffett and Ben Graham within the first 3 mins.

Well, "good" capital allocation is tautologically good, so all else being equal, it's always good to have. I think the point that shouldn't be forgotten is that everything else that is important about a good business still applies. The moat, the price you pay, the cash generation ability, the reinvestment opportunities, etc. Put a good capital allocator in charge of a terrible business, and you probably won't get good results, though maybe (like Buffett) he'll at least be able to expand energy in switching boats rather than plugging the leaky one... The book did look at successful good capital allocators, so they pretty much all had good businesses to work with. I'm not sure if it's a fault of the book. It certainly would make for an interesting - but different - book to look at what kind of things tripped up good capital allocators and made them unsuccessful. The mistakes of smart, successful investors and businessmen are always great to learn about, IMO. As for the dangers of debt, I think most of the outsiders in the book who used lots of debt did it because they were in businesses that could handle it. That's part of being a good capital allocator, to know how much debt to safely use... Of course, as investors we all have our own risk tolerance which might not match a certain CEO's, and we might be proven right or wrong over time, but that's a different question IMO.

More outsider discussion: http://brooklyninvestor.blogspot.ca/2013/11/what-to-do-in-this-market.html

Some cool stuff about display technology: http://www.macrumors.com/2013/11/05/apples-ipad-air-adopts-igzo-technology-for-thinner-lower-power-displays/

http://ir.libertyinteractive.com/secfiling.cfm?filingid=1355096-13-63&CIK=1355096 http://www.businesswire.com/news/home/20131105005850/en/Liberty-Interactive-Corporation-Reports-Quarter-2013-Financial CEO: “We repurchased $303 million of Liberty Interactive stock from August 1 to October 31, and $854 million year to date.

Yes, this is problem Number 1 that has to be addressed if they really are going to try to transform. As I said before, if I were an engineer at BBRY, I would be fleeing to GOOG or to the start up world. And it's not just engineers that are leaving. It's customers too. They certainly are getting recruited: http://money.cnn.com/2013/10/11/technology/enterprise/blackberry-apple/

Hmm, Jeff Bezos' wife reviewing this book, not very positive at all (doesn't mean it's not a good book or that she's not biased, but this data point should be taken into consideration): http://www.amazon.com/review/R2I0T26SV0ELPP/ref=cm_cr_pr_perm?ie=UTF8&ASIN=0316219266&linkCode=&nodeID=&tag=

You and I have very different tastes (and that's fine). To me that looks like a generic disposable phone :) http://www.htc.com/managed-assets/shared/desktop/smartphones/htc-wp-8x/features/wp8x-f2-1.png

Charter's Q3: http://phx.corporate-ir.net/phoenix.zhtml?c=112298&p=irol-newsArticle&ID=1872371&highlight=

SolarCity stock up almost 20% today... Up 450% in about a year.

I think you've pretty well nailed my view of CFX and DHR. I would add that a lot of CFX's products are lower quantity higher tech products that require significant outlays to design and tool up to build. Many people can build this stuff but it takes an investment to do it cheaply. I believe their culture will push down the cost and improve the margins. Kaizen isn't rocket science but I've seen personally companies I've worked for do it very well, while others I've worked for have done it pretty poorly. I don't think CFX represents a great margin of safety at today's price, but if I were to add to a position right now it's on my short list. What is your view on CFX vs DHR going forward? Do you think DHR has reached a size where it becomes harder to grow because they need ever bigger acquisitions and there's more competition for those, so valuationd aren't as attractive? So conversely, is CFX more interesting because it's at an earlier stage of thr DHR model..? Or do you see it differently, maybe DHR is in more attractive markets, or diversified enough that it can do a large number of mid-sized acquisitions and still grow quickly that way for a while longer? Or maybe despite the similar model, one company has significantly better management? Anything making DHR less attractive at current price and size? Thanks.

Thanks for the links, Dustin. It does give some idea of the Rales and their approach. Another thing I'm trying to get a better sense of is how much of a moat do they have around their products. With transdigm for example, it's clear that they are the sole maker of many of their products and government certification is a high barrier to entry for new entrants. As long as planes fly, they'll have an aftermarket demand. But with CFX, what provides the moat? I get that they operate in niches where performance and quality matters more than price, which helps margins, but what keeps competition out? Is it that their kaizen processes are easy to talk about but hard to apply consistently, so most competitors are doomed to be stuck at lower margins, which makes the industry less attractive to new entrants, and so CFX can just float on top of the industry thanks to their hard to replicate culture and capital allocations skills, acquiring competitors and then improving their margins?

Some more context on how Google, via Motorola, has been suing Apple all over the world before this: http://daringfireball.net/2013/11/rockstar_suit Seems like an all out war from all sides...

I did my part. I ordered a iPad Air (64 gig wifi) this morning.