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FRMO - FRMO Corp.


Guest hellsten

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2019 letter was posted: same story, different year

 

https://frmocorp.com/_content/letters/2019.pdf

 

Impressive that this has been trading since 1998...

 

hI2mJnh.png

 

Less impressive that the SP500 has more than tripled its performance since then with a lot less volatility (unless they did some big special dividends that I forgot about -- I used to follow the company more a few years ago, but I think I've mostly forgotten what I used to know about it)...

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Har, har, Liberty--your sense of humor...

 

"On August 31, 2000, FRM filed Form 8-K with the Securities and Exchange

Commission, which disclosed that FRM contemplated distributing to its

shareholders one share of MFC common stock for each one share of FRM's 1,800,000

shares of outstanding common stock at the close of business on November 1, 2000

(the record date)...

 

The MFC shares were distributed on January 23, 2001...

 

After January 23, 2001 FRM has had no further interest in MFC and it owns no

shares of MFC stock...

 

After the spin-off, FRM was recapitalized privately by the FRM Control Group

(described below) purchasing 34,200,000 shares of common stock for $3,258,000

($0.095 per share). By retaining only $10,000 in cash in FRM, the shareholders'

book value for the 1,800,000 shares outstanding was less than $.01 per share. By

fixing the price that the new Control Group paid for their 95% ownership at

$.095 per share, the existing shareholders realized an increase in book value

from about $.01 per share to about $.091 per share and the shares of the new FRM

Control Group were diluted from about $.095 to about $.091 per share...

 

Murray Stahl and Steven Bregman, Chairman and President of the Company,

respectively, are the principal persons in the FRM Control Group, which includes

the other persons who purchased the shares for the consideration stated below."

 

If your calculator is still available, could you compute the compounded return from $0.095 per share?  Then, v. the S&P?  Thanks.

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Har, har, Liberty--your sense of humor...

 

"On August 31, 2000, FRM filed Form 8-K with the Securities and Exchange

Commission, which disclosed that FRM contemplated distributing to its

shareholders one share of MFC common stock for each one share of FRM's 1,800,000

shares of outstanding common stock at the close of business on November 1, 2000

(the record date)...

 

The MFC shares were distributed on January 23, 2001...

 

After January 23, 2001 FRM has had no further interest in MFC and it owns no

shares of MFC stock...

 

After the spin-off, FRM was recapitalized privately by the FRM Control Group

(described below) purchasing 34,200,000 shares of common stock for $3,258,000

($0.095 per share). By retaining only $10,000 in cash in FRM, the shareholders'

book value for the 1,800,000 shares outstanding was less than $.01 per share. By

fixing the price that the new Control Group paid for their 95% ownership at

$.095 per share, the existing shareholders realized an increase in book value

from about $.01 per share to about $.091 per share and the shares of the new FRM

Control Group were diluted from about $.095 to about $.091 per share...

 

Murray Stahl and Steven Bregman, Chairman and President of the Company,

respectively, are the principal persons in the FRM Control Group, which includes

the other persons who purchased the shares for the consideration stated below."

 

If your calculator is still available, could you compute the compounded return from $0.095 per share?  Then, v. the S&P?  Thanks.

 

Good to know, I knew I had forgotten about the history of the company. So much esoteric stuff going on with them, with the rev share and the changes to it and all that..

 

Not necessary done that well for shareholders who invested after that, but that's another story.

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It's not like they control the pricing of the stock... if you invested in 2012, you're in at about $2 per share. If you just read the statements without looking at the price movement they've done ok.

 

Complaining about changes in the revenue share is just plain ignorant. Stahl and Bregman are way too generous towards frmo shareholders in how they structure fees to frmo from HK. I honestly don't think there's anything like it out there...

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It's not like they control the pricing of the stock... if you invested in 2012, you're in at about $2 per share. If you just read the statements without looking at the price movement they've done ok.

 

Complaining about changes in the revenue share is just plain ignorant. Stahl and Bregman are way too generous towards frmo shareholders in how they structure fees to frmo from HK. I honestly don't think there's anything like it out there...

 

Settle down.

 

Did I complain? I said it was esoteric. I meant it's confusing and complex, and when you haven't thought about the company (which I used to own) in years, most of it is down the memory hole.

 

 

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  • 6 months later...

Once in a while I remember this company and have a look.

 

The dynamic reminds me a bit of Altius. It's really interesting on paper, which is why I originally bought it. But the stock still trades where it did in 2005.... It's a bit like the old saying "however beautiful the theory, once in a while it should be compared with reality" (can't remember exact phrasing, but that's the gist of it).

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That's because these guys have spent the last decade positioned for zimbabwe level hyperinflation. You almost couldn't dream up a thesis that turned out to be more wrong. They think the ETF-driven system is set to crash, and then stick about a third of their AUM in a single oil-driven stock, TPL. Add to that their religious belief in bitcoin, a thesis that will never come to pass, and this is the result. On top of that, they take no responsibility for their mistakes and just keep blaming passive investing.

 

The guys are smooth talkers and that's about it. I say this as someone who made FRMO by-far the largest position in my portfolio a decade ago.

 

 

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That's because these guys have spent the last decade positioned for zimbabwe level hyperinflation. You almost couldn't dream up a thesis that turned out to be more wrong. They think the ETF-driven system is set to crash, and then stick about a third of their AUM in a single oil-driven stock, TPL. Add to that their religious belief in bitcoin, a thesis that will never come to pass, and this is the result. On top of that, they take no responsibility for their mistakes and just keep blaming passive investing.

 

The guys are smooth talkers and that's about it. I say this as someone who made FRMO by-far the largest position in my portfolio a decade ago.

 

Reminds me a little of Leucadia, with the big positioning for inflation and commodities, before the JEF exit..

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It's really interesting on paper, which is why I originally bought it. But the stock still trades where it did in 2005.... It's a bit like the old saying "however beautiful the theory, once in a while it should be compared with reality" (can't remember exact phrasing, but that's the gist of it).

 

Lovely sentiment - one to remember.  I usually get tripped up this way when I try to be too clever.

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That's because these guys have spent the last decade positioned for zimbabwe level hyperinflation. You almost couldn't dream up a thesis that turned out to be more wrong. They think the ETF-driven system is set to crash, and then stick about a third of their AUM in a single oil-driven stock, TPL. Add to that their religious belief in bitcoin, a thesis that will never come to pass, and this is the result. On top of that, they take no responsibility for their mistakes and just keep blaming passive investing.

 

The guys are smooth talkers and that's about it. I say this as someone who made FRMO by-far the largest position in my portfolio a decade ago.

 

Reminds me a little of Leucadia, with the big positioning for inflation and commodities, before the JEF exit..

 

At least LUK had the guts to say "We are positioned for inflation, if you don't believe inflation is coming, you shouldn't invest." Or something to that effect. I guess they were right!  :)

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At least LUK had the guts to say "We are positioned for inflation, if you don't believe inflation is coming, you shouldn't invest." Or something to that effect. I guess they were right!  :)

 

Yes, I remember it being very explicit, close to those words in one, if not many, of their letters.

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  • 8 months later...

It's really interesting on paper, which is why I originally bought it. But the stock still trades where it did in 2005.... It's a bit like the old saying "however beautiful the theory, once in a while it should be compared with reality" (can't remember exact phrasing, but that's the gist of it).

 

Lovely sentiment - one to remember.  I usually get tripped up this way when I try to be too clever.

 

Ditto.

 

I always treated LUK more like a hedge. They made bets off their forecasts of the future and got lucky a few times. Seemed that sometimes they believed too much in their ability to predict the future.

 

I always try to maintain the view that no one can predict the future so I find FRMO rather refreshing in their rather explicit statements that they cannot predict the future so are endeavouring to make low cost bets on various possibilities.

 

As for quotes on theory I like the tongue-in-cheek saying that goes like: It works in practice, but does it work in theory?

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