Ask Kraven!

[racemize]

I know there were some jokes about this in the BAC leverage thread, but I'm pretty interested in Kraven's approach.  We all understand how Eric's works, at least at a broad level, and if you are good it can be phenomenal, but if you aren't as good, it could also kill you. 

 

So Kraven, other than saying it is like Graham or Schloss, what do you do?  Is it mechanical, does it start with screens, or what?  You mentioned you only invest 1% to start--do you ever add to it after that, or just let it grow on its own? 

 

Overall, what's your framework for buying and selling?

 

Thanks!

[Kraven]

I know there were some jokes about this in the BAC leverage thread, but I'm pretty interested in Kraven's approach.  We all understand how Eric's works, at least at a broad level, and if you are good it can be phenomenal, but if you aren't as good, it could also kill you. 

 

So Kraven, other than saying it is like Graham or Schloss, what do you do?  Is it mechanical, does it start with screens, or what?  You mentioned you only invest 1% to start--do you ever add to it after that, or just let it grow on its own? 

 

Overall, what's your framework for buying and selling?

 

Thanks!

 

Well, sonny, pull up a chair and let me fill my pipe and heat up some herbal tea for us.  It all started back in the spring of 1923 . . . or perhaps that was 1924, I can't quite remember now.  America was coming into its own and rearing to go.  Corporations were no different and the stock market was soon to become the pasttime for literally dozens if not hundreds of people.  I was there with a front row seat so join me as we take this journey through the years together.

[Green King]

Here starts the fun !! :D ;D

[txlaw]

I know there were some jokes about this in the BAC leverage thread, but I'm pretty interested in Kraven's approach.  We all understand how Eric's works, at least at a broad level, and if you are good it can be phenomenal, but if you aren't as good, it could also kill you. 

 

So Kraven, other than saying it is like Graham or Schloss, what do you do?  Is it mechanical, does it start with screens, or what?  You mentioned you only invest 1% to start--do you ever add to it after that, or just let it grow on its own? 

 

Overall, what's your framework for buying and selling?

 

Thanks!

 

Well, sonny, pull up a chair and let me fill my pipe and heat up some herbal tea for us.  It all started back in the spring of 1923 . . . or perhaps that was 1924, I can't quite remember now.  America was coming into its own and rearing to go.  Corporations were no different and the stock market was soon to become the pasttime for literally dozens if not hundreds of people.  I was there with a front row seat so join me as we take this journey through the years together.

 

LOL ;D

[Guest FFHfan]

;D ;D ;D

[txitxo]

I know there were some jokes about this in the BAC leverage thread, but I'm pretty interested in Kraven's approach.  We all understand how Eric's works, at least at a broad level, and if you are good it can be phenomenal, but if you aren't as good, it could also kill you. 

 

So Kraven, other than saying it is like Graham or Schloss, what do you do?  Is it mechanical, does it start with screens, or what?  You mentioned you only invest 1% to start--do you ever add to it after that, or just let it grow on its own? 

 

Overall, what's your framework for buying and selling?

 

Thanks!

 

Well, sonny, pull up a chair and let me fill my pipe and heat up some herbal tea for us.  It all started back in the spring of 1923 . . . or perhaps that was 1924, I can't quite remember now.  America was coming into its own and rearing to go.  Corporations were no different and the stock market was soon to become the pasttime for literally dozens if not hundreds of people.  I was there with a front row seat so join me as we take this journey through the years together.

 

So you are Irving Kahn!

 

"Kahn is currently the oldest active money manager on Wall Street.[2] He made his first trade—a short sale of a copper mining company—in the summer of 1929"

[Kraven]

So you are Irving Kahn!

 

"Kahn is currently the oldest active money manager on Wall Street.[2] He made his first trade—a short sale of a copper mining company—in the summer of 1929"

 

I am not Irving.  Irving is an exceptional young man and I fully expect that he will be a very fine investor once he gets a few more years of experience under his belt and matures a little.

[Parsad]

I know there were some jokes about this in the BAC leverage thread, but I'm pretty interested in Kraven's approach.  We all understand how Eric's works, at least at a broad level, and if you are good it can be phenomenal, but if you aren't as good, it could also kill you. 

 

So Kraven, other than saying it is like Graham or Schloss, what do you do?  Is it mechanical, does it start with screens, or what?  You mentioned you only invest 1% to start--do you ever add to it after that, or just let it grow on its own? 

 

Overall, what's your framework for buying and selling?

 

Thanks!

 

Well, sonny, pull up a chair and let me fill my pipe and heat up some herbal tea for us.  It all started back in the spring of 1923 . . . or perhaps that was 1924, I can't quite remember now.  America was coming into its own and rearing to go.  Corporations were no different and the stock market was soon to become the pasttime for literally dozens if not hundreds of people.  I was there with a front row seat so join me as we take this journey through the years together.

 

So you are Irving Kahn!

 

"Kahn is currently the oldest active money manager on Wall Street.[2] He made his first trade—a short sale of a copper mining company—in the summer of 1929"

 

No, he's Ben Graham.  LOL!  Cheers!

[Kraven]

No, he's Ben Graham.  LOL!  Cheers!

 

Not to be confused though with the prior poster on this board with the Ben Graham screen name who was a loon.

[Kraven]

Ok, fun is fun, but now to attempt to start a serious discussion.  I invest on a quantitative basis, but not in the mechanical sense that is mistakenly ascribed to Graham, etc.  Late in his life, as most on this board know, Graham did become a mechanical quant investor.  That is, he bought whatever met a few basic parameters.  However, that is not what he did early in his life although most believe he did.  His "rules" for defensive investors set out in The Intelligent Investor were specifically geared towards those who weren't "professional" and/or didn't have the time to spend on individual security selection.

 

I have no problem with those who want to invest purely on a quant basis.  As the Quantitative Value book demonstrates, it can provide for spectacular returns.  I have some issues with that approach though. 

 

For me, I find ideas however they come.  There is no specific method for finding them.  My approach is simple.  I look at the numbers and make a determination as to whether the future will look something like the past such that the numbers will provide a proxy for future results.  I am a tremendous believer in reversion to the mean.  I buy and hold just long enough to reach what I believe intrinsic value is.  Then I sell.  Wash, rinse and repeat.

 

Hope this was somewhat helpful.

[racemize]

Do you mind giving some examples from the last copule of years?  For example, would the AIG/BAC investments popular on the board right now qualify for how you invest?

 

In terms of position sizing, what's your philosophy, e.g., do you try to weigh more for your better ideas or just assume they will surprise in either direction?

[txitxo]

So you are Irving Kahn!

 

"Kahn is currently the oldest active money manager on Wall Street.[2] He made his first trade—a short sale of a copper mining company—in the summer of 1929"

 

I am not Irving.  Irving is an exceptional young man and I fully expect that he will be a very fine investor once he gets a few more years of experience under his belt and matures a little.

:D :D :D

[Kraven]

Do you mind giving some examples from the last copule of years?  For example, would the AIG/BAC investments popular on the board right now qualify for how you invest?

 

In terms of position sizing, what's your philosophy, e.g., do you try to weigh more for your better ideas or just assume they will surprise in either direction?

 

Sure, I own some AIG and BAC.  I don't spend my time on the minutiae of it all.  I've posted before on the BAC thread how the thesis is simple for BAC.  Earning power is strong and it's selling below book (and tangible book).  AIG is selling well below book.  In both cases I fully expect things to normalize and for them to revert to the mean.

 

Positions are generally around the same size to start give or take.  All small.  I add as things falls.  Once in a while I will add even if something has moved up.  I don't generally weigh more for better ideas as I think most things are pretty much the same.  I rarely feel great conviction about something.  As Oddball, Txitxo and others have discussed there are too many unknown unknowns.  I don't diversify for the sake of diversification.  I don't say "I need [  ] positions".  I simply buy what I find that I like.  I mentioned before about the store analogy.  Stocks are the inventory for my store.  I fill the aisles if there is good merchandise or don't if I can find anything.  But everything is for sale.  I don't fall in love with anything.

 

[DCG]

No, he's Ben Graham.  LOL!  Cheers!

 

Not to be confused though with the prior poster on this board with the Ben Graham screen name who was a loon.

 

:D totally.

[jeffmori7]

Do you mind giving some examples from the last copule of years?  For example, would the AIG/BAC investments popular on the board right now qualify for how you invest?

 

In terms of position sizing, what's your philosophy, e.g., do you try to weigh more for your better ideas or just assume they will surprise in either direction?

 

Sure, I own some AIG and BAC.  I don't spend my time on the minutiae of it all.  I've posted before on the BAC thread how the thesis is simple for BAC.  Earning power is strong and it's selling below book (and tangible book).  AIG is selling well below book.  In both cases I fully expect things to normalize and for them to revert to the mean.

 

Positions are generally around the same size to start give or take.  All small.  I add as things falls.  Once in a while I will add even if something has moved up.  I don't generally weigh more for better ideas as I think most things are pretty much the same.  I rarely feel great conviction about something.  As Oddball, Txitxo and others have discussed there are too many unknown unknowns.  I don't diversify for the sake of diversification.  I don't say "I need [  ] positions".  I simply buy what I find that I like.  I mentioned before about the store analogy.  Stocks are the inventory for my store.  I fill the aisles if there is good merchandise or don't if I can find anything.  But everything is for sale.  I don't fall in love with anything.

.

 

Thanks Kraven. So reading this, I understand that for you selling isn't really the tough part..I still struggle myself with that part of investing.

 

Does it happen that you regret selling, or you sold too soon, or too late, or you're usually satisfied with that?

[petey2720]

"For me, I find ideas however they come.  There is no specific method for finding them.  My approach is simple.  I look at the numbers and make a determination as to whether the future will look something like the past such that the numbers will provide a proxy for future results.  I am a tremendous believer in reversion to the mean.  I buy and hold just long enough to reach what I believe intrinsic value is.  Then I sell.  Wash, rinse and repeat."

 

Ok so Kraven, let's take this out for a spin on an idea that I first looked at earlier today:

 

MSM - MSC Industrial Direct Co. Inc.

 

 

[Kraven]

Do you mind giving some examples from the last copule of years?  For example, would the AIG/BAC investments popular on the board right now qualify for how you invest?

 

In terms of position sizing, what's your philosophy, e.g., do you try to weigh more for your better ideas or just assume they will surprise in either direction?

 

Sure, I own some AIG and BAC.  I don't spend my time on the minutiae of it all.  I've posted before on the BAC thread how the thesis is simple for BAC.  Earning power is strong and it's selling below book (and tangible book).  AIG is selling well below book.  In both cases I fully expect things to normalize and for them to revert to the mean.

 

Positions are generally around the same size to start give or take.  All small.  I add as things falls.  Once in a while I will add even if something has moved up.  I don't generally weigh more for better ideas as I think most things are pretty much the same.  I rarely feel great conviction about something.  As Oddball, Txitxo and others have discussed there are too many unknown unknowns.  I don't diversify for the sake of diversification.  I don't say "I need [  ] positions".  I simply buy what I find that I like.  I mentioned before about the store analogy.  Stocks are the inventory for my store.  I fill the aisles if there is good merchandise or don't if I can find anything.  But everything is for sale.  I don't fall in love with anything.

.

 

Thanks Kraven. So reading this, I understand that for you selling isn't really the tough part..I still struggle myself with that part of investing.

 

Does it happen that you regret selling, or you sold too soon, or too late, or you're usually satisfied with that?

 

I am not sure I would say selling is easy. I am not sure anything in investing is easy. I try to follow my procedures. I am more or less satisfied. Of course I have some regrets on some sales. I typically sell too soon. My advice to you for whatever its worth is to set your sell target in advance. It takes the emotion out of it.

[Kraven]

"For me, I find ideas however they come.  There is no specific method for finding them.  My approach is simple.  I look at the numbers and make a determination as to whether the future will look something like the past such that the numbers will provide a proxy for future results.  I am a tremendous believer in reversion to the mean.  I buy and hold just long enough to reach what I believe intrinsic value is.  Then I sell.  Wash, rinse and repeat."

 

Ok so Kraven, let's take this out for a spin on an idea that I first looked at earlier today:

 

MSM - MSC Industrial Direct Co. Inc.

 

Yes sir!  Anything else you want me to look at while I'm doing that?  Just name it. Give me a list of stocks you've been wanting to research and I will do the work for you so you can relax. I can tell you've probably been working too hard. I am at your service.

[Studesy]

Hi Kraven

I have a few more questions if you are interested in sharing more details:

 

1) are you interested in Graham type "net nets"

 

2) are you more interested in buying cheap assets or cheap earnings or a combination of the two?

 

3) are you more interested in book value (paying for intangibles) or tangible book?

 

4) do u buy companies that are losing money?

 

5) what is your typical holding period?

 

6) when there is little value to be found do you sit on cash or partake in special situations?

 

Thanks

[Palantir]

Kraven -

 

 

Who let the dogs out?

[onyx1]

Kudos to the idea of an Ask Kraven thread!

Kraven I thought you had the most impressive risk adjusted preformance I can recall for 2012.  Is your historical performance equal as good?  Do you work alone?  Do you manage a small, medium, or large fund? 

I hear they served chipped-beef-on-toast tonight at the old folks home, was it good?

[Kraven]

See responses below in brackets:

 

Hi Kraven

I have a few more questions if you are interested in sharing more details:

 

1) are you interested in Graham type "net nets" [of course!]

 

2) are you more interested in buying cheap assets or cheap earnings or a combination of the two? [ideally cheap assets but cheap earnings are important too]

 

3) are you more interested in book value (paying for intangibles) or tangible book? [ideally tangible book]

 

4) do u buy companies that are losing money? [sure]

 

5) what is your typical holding period? [just long enough]

 

6) when there is little value to be found do you sit on cash or partake in special situations? [yes and yes, but that's really no different than any other time]

 

Thanks

[Kraven]

Kraven -

 

 

Who let the dogs out?

 

You?

[Kraven]

Kudos to the idea of an Ask Kraven thread!

Kraven I thought you had the most impressive risk adjusted preformance I can recall for 2012.  Is your historical performance equal as good?  Do you work alone?  Do you manage a small, medium, or large fund? 

I hear they served chipped-beef-on-toast tonight at the old folks home, was it good?

 

I concur!  It was really an idea whose time had come. The demand was overwhelming.  Ha ha.

 

Thanks for the kind words. There was nothing unusual about the past year.  I work alone unless you count my kids. It's just my own funds.

 

Chipped beef on toast is one of my favorites and was quite good tonight as it always is. We had some of Miss Betty's iced tea and Mabel made some of her famous lemon cake as well. After dinner we gathered to watch the 5 pm local news and then geared up for Wheel of Fortune and Jeopardy.

[LC]

I really like your store analogy! 

 

If I may, what percentage of your portfolio does your largest positions hold? Do you have a mental limit on how much that limit usually is?