bookie71 Posted August 4, 2012 Share Posted August 4, 2012 Since they are not feeding the beef, but only processing, it really doesn't matter as long as they get their mark up and realize their xxcents per pound for processing it. It's the guy's growing and feeding who will be hurt, not the processors. Link to comment Share on other sites More sharing options...
giofranchi Posted August 4, 2012 Share Posted August 4, 2012 bookie71, cogitator99, kiltacular, prevalou, and JRH, thank you for your insights! Very helpful! giofranchi Link to comment Share on other sites More sharing options...
link01 Posted August 4, 2012 Share Posted August 4, 2012 Since they are not feeding the beef, but only processing, it really doesn't matter as long as they get their mark up and realize their xxcents per pound for processing it. It's the guy's growing and feeding who will be hurt, not the processors. nat'l beef & their competitors will certainly be paying much higher prices for a reduced supply. so processors, even assuming they can pass on the cost with higher prices of their own, will probably face a 2 pronged hit in terms of volumes: one from less product, the other from reduced consumer demand as a result of higher prices. and that may cause price discounting from the processors in order to bring lowered supply & demand into balance, imo. Link to comment Share on other sites More sharing options...
cogitator99 Posted August 4, 2012 Share Posted August 4, 2012 Since they are not feeding the beef, but only processing, it really doesn't matter as long as they get their mark up and realize their xxcents per pound for processing it. It's the guy's growing and feeding who will be hurt, not the processors. nat'l beef & their competitors will certainly be paying much higher prices for a reduced supply. so processors, even assuming they can pass on the cost with higher prices of their own, will probably face a 2 pronged hit in terms of volumes: one from less product, the other from reduced consumer demand as a resuly of higher prices. and that may cause price discounting from the processors in order to lowered supply & demand into balance, imo. this is sort of what I'm afraid of. anyone followed this sector in the past, is this how it's played out historically? Link to comment Share on other sites More sharing options...
twacowfca Posted August 4, 2012 Share Posted August 4, 2012 Since they are not feeding the beef, but only processing, it really doesn't matter as long as they get their mark up and realize their xxcents per pound for processing it. It's the guy's growing and feeding who will be hurt, not the processors. nat'l beef & their competitors will certainly be paying much higher prices for a reduced supply. so processors, even assuming they can pass on the cost with higher prices of their own, will probably face a 2 pronged hit in terms of volumes: one from less product, the other from reduced consumer demand as a resuly of higher prices. and that may cause price discounting from the processors in order to lowered supply & demand into balance, imo. LIFO accounting smooths the impact of inventory price increases. Link to comment Share on other sites More sharing options...
WarrenWatsa Posted August 5, 2012 Share Posted August 5, 2012 Since they are not feeding the beef, but only processing, it really doesn't matter as long as they get their mark up and realize their xxcents per pound for processing it. It's the guy's growing and feeding who will be hurt, not the processors. nat'l beef & their competitors will certainly be paying much higher prices for a reduced supply. so processors, even assuming they can pass on the cost with higher prices of their own, will probably face a 2 pronged hit in terms of volumes: one from less product, the other from reduced consumer demand as a resuly of higher prices. and that may cause price discounting from the processors in order to lowered supply & demand into balance, imo. LIFO accounting smooths the impact of inventory price increases. With LIFO, higher inventory costs hit the P&L immediately. It's an inventory costing method typically used to reduce income (taxable income), assuming an environment where there's at least a little inflation. Link to comment Share on other sites More sharing options...
Mikenhe Posted August 6, 2012 Share Posted August 6, 2012 I like LUK and I think that there is a lot of value in the price right now that isn't being seen in the share price. my biggest concern is wi;; it ever be? Is this one of those shares that will never get full credit from Mr Market? If so then, regardless of the underlying business, why would I want to buy it? I,m never going to have a big enough share to influence the board to return value to the shareholders so I have to rely on Mr market to force that and I'm not sure that I can. This might be one that I have to sit back and wait for a drop in price to try to get sufficient value and potential for an increase - and hope that it happens when I have funds available to invest. right now I'm more comfortable with AIG and BAC because I think they will return better increases in price than LUK - even though LUK appears to be a better run business... not understanding the value attached to business by the market seems to be my biggest weakness in investing - well along with procrastination - although at least that can work in my favor occasionally... Link to comment Share on other sites More sharing options...
bargainman Posted August 6, 2012 Share Posted August 6, 2012 I like LUK and I think that there is a lot of value in the price right now that isn't being seen in the share price. my biggest concern is wi;; it ever be? Is this one of those shares that will never get full credit from Mr Market? If so then, regardless of the underlying business, why would I want to buy it? I,m never going to have a big enough share to influence the board to return value to the shareholders so I have to rely on Mr market to force that and I'm not sure that I can. Perhaps the other side of this question is "has it ever gotten full credit from Mr. Market?". If you look back a few years at the point where I sadly bought my first lot, you'll see that it was trading at $35 which at the time was about 2x book value. Now the past is no guarantee of the future, but at least we know Mr Market has at one time been exuberant about this stock... Link to comment Share on other sites More sharing options...
Grenville Posted August 7, 2012 Share Posted August 7, 2012 Jefferies Early On Was Friend to Knight - WSJ http://online.wsj.com/article/SB10000872396390443517104577573620011603832.html Jefferies Provided Funding to Knight Capital on Friday -Sources - WSJ http://online.wsj.com/article/BT-CO-20120806-709824.html?mod=WSJ_latestheadlines Link to comment Share on other sites More sharing options...
Grenville Posted August 7, 2012 Share Posted August 7, 2012 Jefferies invested 125mln in the 400mln capital raise for Knight Capital Group (convertible at 1.5/share) Jefferies 100mln Jefferies High Yield Holdings 25mln I don't know how much of the convertible preferred will be held by Jefferies or syndicated out. Link to comment Share on other sites More sharing options...
Guest hellsten Posted August 7, 2012 Share Posted August 7, 2012 JEF has shareholders equity of $3.3 billion so this deal puts almost 8% of that into KCG. The investment, though was only 4% of equity. Of course this means that JEF has earned an immediate 4% on book just by doing this deal. Not a bad day at the office. Given the low returns on equity these days at investment banks, this will be a nice bump to earnings this year and to book value. Of course, this is assuming that KCG can continue as before. http://brooklyninvestor.blogspot.com/2012/08/knight-capital-group.html Link to comment Share on other sites More sharing options...
Guest hellsten Posted August 8, 2012 Share Posted August 8, 2012 Does anyone here know why Leucadia likes INTL FCStone? Leucadia owns 8.5% of the company and the stock is near 52-week lows… I guess the Knight Capital mess can push it even lower. And it's not only Leucadia that's interested. Brian Bares (http://greatinvestors.tv/video/?currentPage=2) has 14% of his portfolio in INTL and holds 15% of INTL's shares. I like Bares Capital's (http://greatinvestors.tv/video/small-cap-superinvestor-brian-bares-is-there-such-a-thing-as.html) investment process: We prefer companies for our portfolio that are run by talented capital allocators who will maximize returns-on-invested-capital over long periods of time by leveraging some durable competitive advantage. INTL is also on the Fortune 500 list: As you may already know, INTL FCStone is ranked #30 on this year’s prestigious Fortune 500 list, up from #51 on the 2011 list. … Most notably, in terms of total return to shareholders over 10 years, INTL FCStone was ranked number one among all Fortune 500 companies. The number two company? Apple. http://files.intlfcstone.com.s3.amazonaws.com/Fortune500INTLFCStone.pdf Very impressive revenue growth… I'll have to analyze this one in detail. Link to comment Share on other sites More sharing options...
Grenville Posted August 22, 2012 Share Posted August 22, 2012 Good article on Jefferies growth in commodities and its recent application to upgrade to ring dealing membership on the LME. http://in.reuters.com/article/2012/07/31/idINL2E8IP9SY20120731 "LME approves Jefferies Bache as ring-dealing member" http://in.reuters.com/article/2012/08/21/lme-jeffries-idINL6E8JLGE020120821 Jefferies is hiring floor traders from both Newedge and Natixis which are both retreating from the commodities space. Link to comment Share on other sites More sharing options...
JRH Posted September 19, 2012 Share Posted September 19, 2012 Leucadia has settled its dispute with Fortescue by allowing Fortescue to buy out the royalty note: http://www.heraldonline.com/2012/09/19/4274926/leucadia-national-corporation.html "This is, has and will remain a delicious investment." (2010 Annual Report) Link to comment Share on other sites More sharing options...
Myth465 Posted September 19, 2012 Share Posted September 19, 2012 LUK just got a lot less complicated, I wonder what they will do with the case... Link to comment Share on other sites More sharing options...
Liberty Posted September 19, 2012 Author Share Posted September 19, 2012 They must be pissed >:( :-\ Link to comment Share on other sites More sharing options...
racemize Posted September 19, 2012 Share Posted September 19, 2012 They must be pissed >:( :-\ What do you mean? Given the state of Fortescue, seems like a great time to get out. Link to comment Share on other sites More sharing options...
Liberty Posted September 19, 2012 Author Share Posted September 19, 2012 What do you mean? Given the state of Fortescue, seems like a great time to get out. We'll see out much it turns out to be worth over the years - I don't think they looked at it short-term - but just the idea of being apparently screwed by a partner is never fun. Not saying they didn't get good value for it, I don't know exactly since I didn't analyze it and it'll depend a lot on unknown future events. Link to comment Share on other sites More sharing options...
fareastwarriors Posted September 19, 2012 Share Posted September 19, 2012 They must be pissed >:( :-\ What do you mean? Given the state of Fortescue, seems like a great time to get out. Also, they made a bunch of money on this investment already. Link to comment Share on other sites More sharing options...
Liberty Posted September 19, 2012 Author Share Posted September 19, 2012 Sorry I was ambiguous, I didn't mean so much the money as the whole "oh, we'll dilute your royalty, sorry guys" scenario. Maybe it turned out for the best in the end, I don't know. Link to comment Share on other sites More sharing options...
racemize Posted September 19, 2012 Share Posted September 19, 2012 Sorry I was ambiguous, I didn't mean so much the money as the whole "oh, we'll dilute your royalty, sorry guys" scenario. Maybe it turned out for the best in the end, I don't know. Yeah, I understand what you mean now (and agree)--I wasn't sure if you were referring to the settlement or the situation initially. Link to comment Share on other sites More sharing options...
ShahKhezri Posted September 19, 2012 Share Posted September 19, 2012 I'm adding to my position on this news, they liquidated an illiquid position that was 1) exposed to commodity risk, 2) because of 1, exposed to China, and 3) questionable management. Link to comment Share on other sites More sharing options...
mankap Posted September 19, 2012 Share Posted September 19, 2012 I think it is still a multibagger for LUK.If you look at both the equity and the revenue note, it has provided the biggest gains to LUK. It could have been much better if Andrew Forrest had not screwed LUK. Link to comment Share on other sites More sharing options...
benhacker Posted September 19, 2012 Share Posted September 19, 2012 I personally didn't like the FMG common investment, but loved the note. I bought finally after they started blowing out the common, but I'm a bit surprised they sold the note. Decent price, but I wasn't too worried about FMG's ability to pay, but I trust LUK so we'll see what they decide to do and how the world unfolds. Interesting. Ben Link to comment Share on other sites More sharing options...
Guest Dazel Posted September 19, 2012 Share Posted September 19, 2012 What would have happened had they lost the lawsuit? Big dilution...the note expires as well. It is not like a normal royalty that is paid out until the end of production. Smart move cashing in their chips..it is tax free as well because of their tax loss carry forwards...that helps the decision big time. Leucadia knocked the ball out of the park with Fortescue...what great investment. Dazel. Link to comment Share on other sites More sharing options...
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