Horizon Kinetic Q1 2013 Commentary

[giofranchi]

giofranchi

 

“As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Q1_2013_CoreValueCommentary.pdf

[Guest hellsten]

Thanks. Interesting stories about SHLD and Texas Pacific:

 

Texas Pacific was the subject of a 1995 research recommendation; it was, in fact, Horizon’s first research recommendation.

…

Currently, the stock trades at $701 per acre, whereas in 1995 it traded at $55 per acre. The share price today is $73.50; in 1995 it was $4.

 

Texas Pacific is similar to SHLD in at least one way:

The Trust owns the surface estate in 921,616 acres of land in 21 counties in western Texas, as well as perpetual oil and gas royalty interests under about one-half of that land. It was originally endowed with over 3 million acres as a settlement for bonds backing a failed railroad. It has been following a consistent investment policy for well over a century, applying its income from grazing and easement rights, energy royalties and periodic sales of modest amounts of acreage toward the repurchase of its shares. It is very slowly liquidating itself. Shares have been repurchased in all but four of the Trust’s 124 years. This has been occurring at a rate of about 3% per year for decades.

[dcollon]

Gio,

 

Thanks for posting the letter.  I enjoyed the brief comments on SHLD, but actually liked the MLP discussion even more.  As someone that has benefited from the "bubble?" in MLP's, it sure makes me think about where they stand today.

 

Thanks again

[giofranchi]

I enjoyed the brief comments on SHLD, but actually liked the MLP discussion even more.  As someone that has benefited from the "bubble?" in MLP's, it sure makes me think about where they stand today.

 

I liked it too! Although, I was not smart enough to have benefited from the “bubble”…  :(

 

giofranchi

 

“As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

 

[Hielko]

Great read, especially the part about Texas Pacific Land Trust and MLPs. Thanks for posting.