-
Buffett on Franchises
Warren Buffett talks a lot about competitive moats and franchises. However, I think he most succinctly describes his entire philosophy in this short passage: An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject…
-
Financial Crisis Presentation
http://static.slideshare.net/swf/ssplayer2.swf?doc=financial-crisisb-1233167702418842-3&stripped_title=financial-crisis-presentation-962549 The presentation above compliments my previous post on the systemic causes of the financial crisis. Some of the illustrations didn’t translate well on SlideShare, so to download the original in PDF format click here (6.4MB).
-
The Real Causes of the Financial Crisis
(The following is an excerpt from the most recent letter to the partners of Braewick Holdings LP. I’ll be posting a presentation that goes along with this commentary shortly.) There have been many explanations thrown around of how we got ourselves into this mess. However, I have a slightly different take on what really caused…
-
1908 – 2008 – 2108
The New York Times, 11/4/1907 In October of 1907, financial markets in the United States came to a complete halt. Credit markets froze, major banks collapsed, and the stock market plunged. Heads of industry, like J. P. Morgan, were forced to inject massive amounts of capital to prevent a complete collapse. The circumstances of the…
-
A Few Good Articles
Before I finish up with a longer post I’ll get to tomorrow, I thought I’d relay a few good articles on the financial crises: $700 Billion Bailout Celebrated With Lavish $800 Billion Executive Party How Did The Economy Go Bad? The Onion’s 2008 In Review: The Economy And this: (not too far from the truth)…
-
Market Valuation Charts: 10/08
Chart: 10-year trailing Graham (“Real”) P/E Ratio. Price of the S&P 500 divided by the 10-year average of earnings, inflation adjusted. Current value (10/31/08): 15.9x Chart: Profit Margin of U.S. Economy. Annualized corporate profits as a percentage of GDP. (A good reason why the Graham P/E Ratio is a better valuation measure than the TTM…
-
Keep Calm & Carry On
Keep calm & carry on. Sound advice during the current bear market. Forget about Mr. Market’s terrible mood swing. He is there to serve you, not to guide you. Why would he be offering such low prices for the businesses he owns? Who knows. Take advantage of his irrationality. If hearing it from me isn’t…
-
Economic Crisis: Links & Resources
The first version of the bailout bill (3 pages). The third version of the bailout bill (110 pages). And finally, the current version of the bailout bill (451 pages). It seems it is in the nature of politicians to needlessly increase complexity. Warren Buffett’s interview with Charlie Rose. As usual, Buffett gives a great explanation…
-
Value Investing Word Clouds
Berkshire Hathaway Letters (1983-1987) Berkshire Hathaway Letters (2003-2007) A word cloud is a visual representation of a group of words, with the size of each word weighted to how many times it appears. The above two examples use the Berkshire Hathaway shareholder letters for the 5-year periods ending in 1987 and 2007. You can see…
-
Early Berkshire Hathaway Letters
Derek from Stableboy Selections has posted two of the "missing" Berkshire Hathaway letters (1969 – 1977). The first is written by Ken Chace, the CEO that Buffett put in charge after he ousted Seabury Stanton. These go along with the previously released 1973 and 1976 letters, which I link to below. Berkshire Hathaway 1969 &…
-
3 Interesting 13F Buys (Q2-08)
Yesterday the 13F’s were released for funds managing over $100 million. Below is a list of 3 picks that I found interesting: 1. Dr Pepper Snapple Group, Inc. (::yahoo(“DPS”)::) Nelson Peltz (Trian), David Einhorn (Greenlight), Bill Ackman (Pershing) In May, Dr Pepper was spun off of Cadbury Schweppes and traded in the $20-26 range until…
-
Is the Internet Ruining Media? Hardly.
In Saturday’s Wall Street Journal, Elizabeth Wurtzel wrote an opinion piece titled “The Internet Is Ruining America’s Movies and Music.” She talks about how both businesses aren’t like they used to be, because of—you guessed it—the internet. It’s easy to understand why many people in both the music and movie industries long for the good…
-
On Financial Stocks and Portfolio Risk
Tom Brown recently posted a rebuttal to Jason Zweig’s Wall Street Journal column. Geoff Gannon also wrote a great follow-up article with more on Benjamin Graham. I suggest reading all three articles. In this post, I wanted to comment on a few aspects of Tom Brown’s argument, some of which I have been thinking about…
-
3 Great Videos from TED
The following three videos from TED are not necessarily related to business or investing. But you should watch them anyway. Benjamin Zander: Classical music with shining eyes Benjamin Zander has two infectious passions: classical music, and helping us all realize our untapped love for it — and by extension, our untapped love for all new…
-
An Early Christmas for Value Investors
Christmas comes but once a year. This year, it comes three months early for those in the world of value investing. The following two books will be released at the end of September: September 26 — ::amazon(“0071592539″,”Security Analysis: Sixth Edition”):: After a 20 year hiatus, McGraw-Hill is releasing the latest updated edition of Ben Graham’s…
-
4 Interesting 13F Buys (Q1-08)
I’ll try as much as possible to keep this tradition up every quarter. Today is the day that the 13F’s are released for funds managing over $100m. Below is a list of 4 picks that I find interesting: 1. WellCare Health Plans (WCG) — Pabrai Investments, Fairholme Fund — I don’t know much about healthcare…
-
Flight of the Black Swan
The cover story of the May edition of the Bloomberg Markets magazine discusses Nassim Nicholas Taleb’s affect on Wall Street: On a freezing day in March 2007, Nassim Taleb walked into a conference room at Morgan Stanley’s Manhattan offices on 47th Street and Broadway to address a group of the firm’s risk managers. His message:…
-
Dr Pepper Snapple: Spin-off Bargain?
On Wednesday the 7th, Dr Pepper Snapple Group (::yahoo(“DPS”)::) officially began to trade. Its $25 price tag is lower than many expected after the soft-drink maker was spun-off of its parent company, Cadbury Schweppes. Because spin-offs in general beat the market (and can make for excellent hunting grounds), I’m always looking for potential purchases. DPS…
-
FutureBlind Digest 4/22/08
A few good articles on the Freakonomics blog: Phil Gordon Answers Your Poker Questions / Great interview with poker pro Phil Gordon where he talks about randomness, psychology and the future of card playing. Not-So-Free Ride: The trouble with negative externalities / On creating better-aligned incentives to deal with the effects of cars and the…
-
Blog update 4/08
Over the next few months, due to other commitments I won’t be writing posts as frequently. [Removed] Until then, you’ll have to settle with a few posts here and there with links I may find interesting. On that note, I’ll take this time to thank all the readers and subscribers of this blog. It’s been…
-
Ed Thorp & Over-betting
In today’s Wall Street Journal, there’s a great interview with Edward Thorp and Bill Gross. Both investors are asked about current market conditions and their thoughts on investing in general. Ed Thorp is a hedge fund manager who ran Princton-Newport Partners and has returns of 20% over a 28-year period (ending 1998). In addition to his…
-
Berkshire Part 1: See’s and PetroChina
You’ve probably read Warren Buffett’s 2007 letter to shareholders that was released a week ago. If not, stop everything you’re doing, and read it now. Below are a few comments I have on some of the things Buffett mentions in the letter. The second part of this post should be up later today. On See’s…
-
Decisions in the face of uncertainty
Studying Students’ Reaction to Chance An interesting article on a contest held at University of Virginia’s Darden School of Business. The contest split 269 students into two groups: 1. The first chooses one of two unmarked briefcases. One has a check for $18,750, and the other has nothing. Before opening the case, they are offered…
-
5 Interesting 13F Buys (Q4-07)
Keeping up tradition from the last quarter, below is a list of 5 stocks that were added to the portfolio’s that I watch. These are either potentially interesting investments or just companies to keep an eye on. 1. Sears Holdings (::yahoo(“SHLD”)::) — Fairholme Fund, Pabrai Investments, Pershing Square — More super-investors realizing that Sears isn’t…
-
Risk Arbitrage 101
Below is the second clip from my 2007 letter to partners. The first post was a case study of Tribune Co., an arbitrage situation we participated in last year. “Give a man a fish and he eats for a day. Teach him to arbitrage, and he will eat for a lifetime.” —Warren Buffett Risk arbitrage…
-
Tribune Co. Case Study
The following is a section from my 2007 letter to partners. It examines the buyout of the Tribune Company, an arbitrage situation we took part in last year. Tomorrow I will post another section that discusses risk arbitrage. (Please note that I have removed some of the non-public information that was included the actual letter).…
-
6 Sources for Company Research
I find it useful to know as much as possible about any potential investment, especially if it may become a large position down the road. Why is Company X where it’s at today? Knowing their history, philosophy, and information about current/past management teams can help you solve that question. In turn, it will help when…
-
CES Video Podcasts
Guy Kawasaki points readers to a list of videos from the Consumer Electronics Show last week. The feed includes the keynote speeches and more specific sessions by CES presenters. Below are the links to my favorite presentations. The Bill Gates keynote (very funny) link on the feed is broken, so below is the link to…
-
Idea: ValueVision Media
ValueVision Media (VVTV) – $5.58 Although I planned on writing up my entire thesis for VVTV, things got a little busy and I never ended up finishing it. Thankfully, someone over at Value Investors Club has done my job for me. Click here to see david101’s writeup on ValueVision (available via a 45-day delay). I…
-
More Holiday Reading
Death, Taxes, and Reversion to the Mean / Michael Mauboussin’s latest paper on reversion to the mean – why high return on capital can’t stay high forever – incorporating reversion to the mean in DCF valuations – “Good to great” and “Great to good”. I came across Shahin Khezri’s blog a few days ago, and…
-
FutureBlind Digest for December
Some interesting reading material for the holidays: Rough Rider / This New Yorker article is a month old, but if you haven’t read it yet I strongly recommend it. Connie Bruck profiles Sam Zell and his history of contrarianism and buying assets on the cheap. Zell has quite a personality, and I think that any…
-
“Real people” invade Amazon
Seth Godin points readers to evidence that there’s real people working at Amazon.com (::yahoo(“AMZN”)::). This is just one of the many reasons that great service is sending more and more customers to companies like Amazon. By doing something that customers don’t expect—Amazon stands out from the crowd. One person has a good experience. They tell…
-
Faulty Sears Holdings Analysis
Fachidiot (German): An excessively narrow-minded technical expert. A man with a hammer. Sears Holdings (SHLD) has recently been the subject of much discussion among the media and investor community. Below are a few quotes from an article in the Chicago Sun-Times discussing the thoughts of Gary Balter, a retail analyst at Credit Suisse. …Sears could…
-
Quants, charts and trends, oh my!
Photo by saibotregeel Tariq Ali writes a great post about the follies of our fellow investing clan. I disagree with a few of the specific points he brings up but think the overall message is right on. It’s wrong to judge the quant and technical analysis firms without knowing exactly how they work. If an…
-
FutureBlind Digest for November 21
Some interesting reading material for the holiday week: On incentives, biases, and lollapalooza effects / Todd Kenyon discusses Charlie Munger’s Mental Models and their application to the recent meltdown in the Financial markets. Malone’s Playbook / Goes over a brief history of John Malone’s media companies. Also discusses his latest strategies and what he may…
-
5 Interesting 13F Buys
On the 45th day of every quarter, fund managers and institutions must file their 13Fs. For anyone managing over $100 million in assets, this list of holdings (for the past quarter) gets published on the SEC’s website. Another great resource for monitoring the portfolio’s of super-investors is GuruFocus. Below is a list of 5 stocks…
-
HSN: A Future Bargain?
There have been a lot of articles and blog posts recently regarding the split-up of IAC/InterActiveCorp (IACI). Basically, IAC is an internet/retail/media conglomerate that has been trading at a discount because of its complexity. Last Monday, Barry Diller announced that IAC will be splitting up into 5 separately traded public companies. I won’t go into…
-
TED Talk Videos
The TED Conference (Technology, Entertainment, Design) is held annually in Monteray, California. TED brings together some of the most intelligent thinkers and leaders from across the globe to talk about innovation, technology and other interesting topics. Below I list some of my favorite talks relating to business and technology. Be sure to check out all…
-
PetroChina: A Look Back
Warren Buffett first began purchasing shares of PetroChina (PTR) sometime in 2002 (because it was on a foreign exchange, we don’t know the exact date), and filed his first 13G on April 30, 2003. The following is a short case study of Berkshire Hathaway’s investment—from when the first purchase was made five years ago to…
-
The Forbes 8 Value Investor Index
After looking over the recently released Forbes 400 list (the richest 400 people in America), I noticed the list has included more and more individuals in the “Finance/Investments” category. The growth in assets managed by Hedge Funds and Private Equity companies has been a major cause of this increase. In the Forbes 400 magazine, it…
-
The Blow-Up Artist
For anyone who has read the book Fooled by Randomness by Nassim Nicholas Taleb, the name Victor Niederhoffer may sound familiar (if you haven’t read the book, check out this article by Malcolm Gladwell). “The Blow-Up Artist”, a great article in The New Yorker, discusses Niederhoffer’s most recent financial troubles. Although Niederhoffer and Nassim Taleb…
-
Investment Idea: MAIR
MAIR Holdings (MAIR) – $5.17 MAIR is a very low risk / high uncertainty opportunity that has identifiable catalysts to unlock value in a reasonable amount of time. MAIR is a holding company that at the moment owns a very small regional airline (Big Sky Airlines) but is a majority cash and investments. It previously…
-
Reality Bytes
So I just finished watching the debut of Dancing With the Stars. I saw a bit of the last season, and I really didn’t like it. But as far as reality shows go, my dislike was nothing out of the ordinary. However, I have two reasons for watching this season: the first being Mark Cuban.…
-
Quality Without Compromise
See’s Candies, Warren Buffett and the perfect investment. PDF Version of “Quality Without Compromise” William Ramsey, an executive at Blue Chip Stamps, stood in the office of Robert Flaherty as they both awaited a call. Moments earlier, Flaherty attempted to persuade Warren Buffett, majority owner of Blue Chip, to consider purchasing See’s Candy Shops Inc.,…
-
Warren Buffett & The Washington Post
By Max Olson PDF Version of “Warren Buffett & The Washington Post” There is no question that Warren Buffett is one of the greatest investors of all time. To study his investment methods, there are the Berkshire Hathaway annual letters, biographies, and dozens of other books written on the subject of value investing. But, Buffett’s…
FutureBlind 