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Statistics |
| Unique Visitors: 153 |
| Total Unique Visitors: 460484 |
| Visitors Out: 2214 |
| Total Visitors Out: 5171 |
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| Picture of me with Mohnish Pabrai & David Lau |
| 2008-05-07 18:35:00 |
I was looking through a BRk Meeting photo album of David Lau's and found this picture of me with him and Mohnish Pabrai, there's also one with Joe Koster, you can find them here:With Mohnish PabraiWith Joe KosterIn the second one I look a little strange, my pants were too long ;-)
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| Overstock CC Notes |
| 2008-04-27 22:40:00 |
Here are my notes to the Overstock (OSTK) conference call I think is still undervalued, and this great quarter porves they are turning around. Any notes are in italics • Revenue 201 mln up 27%• Fullfillment partner growth 33%• 17.3% gross margins• Gross profits up 37%• Marketing expenses up 33%• Technology and SG&A down 6%• Operating expenses down 9%• Expenses up 6% w/o restructuring Though a lot of this is D&A, and CapEx has been falling• Repurchased 5% of outstanding shares at $10.81 per shares Great return on those already, may have bought on the same day I did ;-)• 3rd consecutive quarter of positive EBITDA, $3.5 mln vs. -$8.3 mln last year which is an OK measure b/c D&A is artificially high• On ttm basis OCF became...
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| Quick Update |
| 2008-04-27 20:30:00 |
A combination of immense studying and staying after school with my laptop screwing up for the second time in as many months has stopped me from posting at all in the past week, and will slow the amount of posts for the time being.I will try to start posting regularly again as soon as possible, but may only post a few times in the next few weeks, but look forward to some long posts.-Mike
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| Right Price Checklist: Conclusion |
| 2008-04-19 18:41:00 |
· Business, and an Explanation of the Checklist· Moat· Management· Financials· ValuationThe final part of the series, I've decided to put off the psychology post until I have time to learn more and know what I'm talking about, is the conclusion.I believe there are three crucial factors to apply in your conclusion:Margin of SafetyWhy it undervaluedCatalystConclusionMargin of SafetyMargin of Safety is at the top of any value investing strategy. It's a very easy to understand concept: when buying shares in a company make sure they are worth more than you are paying.The thing most debatable about margin of safety is how much of is needed. To guarantee future profits I like to look for companies that poseses a 40% margin of safety between the current price and value, but for truly great co...
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| Joe Koster Interview, Part Deux |
| 2008-04-18 01:25:00 |
In January of 2007 I posted an interview with Joe Koster, an analyst for the firm where I had interned over the summer.Since then Chanticleer earned 68% net to investors in 2007, by mining for micro-cap value stocks and doing intensive research and scuttlebutt, and the stock Joe mentioned in the first interview,Tandy Leather, is down over 65%.Right Price Investing: In the last interview you talked about Tandy as one of the companies in your portfolio, and valued it in the $8.50-9 range, a lot has happened since then and it's currently trading below $3 per share, where do you value it now?Joe Koster: We think the value is north of $6 for sure.We think it will still be worth $8-10 once they get back to a more normal envir...
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| Right Price Checklist: Value |
| 2008-04-16 23:17:00 |
· Business, and an Explanation of the Checklist· Moat· Management· FinancialsValuing a business is how a successful investor can decide when to buy and when to sell great companies.Before I start, I'd like to add that when doing my analysis I like to keep any valuation out of my head until the end, to keep myself from becoming biased, I don't even look at the stock price.In this article the methods of valuations I will use are:Target PricePabrai MultiplePabrai DCFMatt Richey's DCFAbsolute P/ECroesus TestReverse DCFLiquidation ValueValuationTarget PriceThe first test is relatively simple, but not one that should be used without taking a spoonful or so of salt.To find a target price, one projects revenue five years into the future, then converts that into...
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| Portfolio April 08 |
| 2008-04-16 11:12:00 |
Last TimeThe last post was on the 19th, but I've decided to take a quick break from the checklist, the valuation post has a ton of methods, and update the portfolio now, after some recent sells.The current total amount of the portfolio is $9,069, subtracting $500 in cash I added and it's at $8,569 which is an 8% gain, representing a very strange up month, and here we'll find out why.PositionsAmerican Express (AXP) $967.72 11%AXP is currently trading for $43.76, which is up 4% from $42 where it was on March 19th. It currently represents 11% of the portfolio, which is down a percent since the last post mainly because the portfolio as a whole is up higher than it is.Since the last post American Express bought GE's money unit, but there hasn't been any othe...
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| Right Price Checklist: Financials |
| 2008-04-16 02:26:00 |
· Business, and an explanation of the checklist· Moat· ManagementAnalyzing the financials of a business is necessary to find how cash runs through a business and measure how a company's assets compare to its debt.In this article I'll go over what to analyze in each of the two main financial statements, and how to find cash flow.FinancialsIncome Statement MarginsHigh margins are one of the best ways to judge how efficient a company is. They also help show who has the better competitive advantage, either by a better cost system or the ability to price their goods higher.I like to look a gross margins, operating margins (which are usually the best way to compare competitors so different tax rates don't skew the results), profit margins and cash flow margins.ExpensesAfter looking at margins...
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| Right Price Checklist: Best Buy Management |
| 2008-04-13 03:48:00 |
Business, and an explanation of the checklistMoatManagementIntegrityPayBest Buy (BBY) CEO Robert Willert was paid $8.65 million last year, as opposed to $6.95 million by Circuit City (CC) CEO Philip Schoonover.Best Buy's market cap is about 26x larger than Circuit City's, Willert's salary isn't even close to being double Schoonover's.RestructuringBest Buy has no one-time charges in the last three years.Related-Party StuffBest Buy has multiple related party transactions:Two stores are leased from founder and chairman of the board Richard Shulze, the rents paid for these stores in 2007 were $976k. The company also leases airplanes from a corporation owned by Schulze, and paid him $393k for them. The company does business with Shulze's brother's business ...
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| Right Price Checklist: Management |
| 2008-04-12 13:22:00 |
My Internet connection was down on Monday and Tuesday, and for the rest of the week I had to go before and stay after school for some upcoming AP tests, which explains my hiatus. I'm happy to say I've improved in Calculus by about 25%, by putting in about 15 hours so far in extra studying, which is most likely a positive.Luckily, Spring Break is the upcoming week, so I'll have a lot of time to finish the checklist and make my conclusion on Best Buy, then work on some projects.Business, and an explanation of the checklistMoatManagementThe next part of the series is management, some investors call this the most important of the analysis, it is the are where I have the least experience and have tripped up the most in the past.I don't have any way of talki...
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| Right Price Checklist: Moat |
| 2008-04-05 18:53:00 |
Business, and an explanation of the ChecklistMoatDoes it have a moat?This may seem like one of the hardest things to find in investing, but it is inherently easy to find if a company has a moat.A moat is just something that differentiates one's company from another and allows it to earn higher returns selling its products or services.What is the moat?This is harder to find, a company may have a great moat, but what is it? Do they offer the lowest price (eg Wal-Mart), are there barriers to entry in the industry (Waste Management), high switching costs (Adobe), does it have a great brand (American Express) or does it have a better quality product (Lexus).Many companies have other variations of the above mentioned moats and many companies have multiple moats.How long will it last?This is the ...
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| Right Price Checklist: Business |
| 2008-04-04 23:30:00 |
Charlie Munger has said that checklists are the best option when researching a company.I've been using the checklist from The Warren Buffett Way to research companies, but have decided to create my own 'Right Price' checklist, that covers more information and will evolve continually as I learn and grow.The checklist will cover: business; moat; management; financials; valuation; psychology; and the buy or sell conclusion (including two-minute drill).Sections may be added or subtracted in the future as my philosophy evolves, but the basics will probably stay the same.I'll go over the checklist in different posts and may ammend them as I go. To illustrate the checklist I'll use Best Buy (whom I've written about before).BusinessTranslate Business Description...
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| Updated About Section |
| 2008-04-04 23:27:00 |
I've updated the About the blog post.The post goes over my investing history and the history of the blog, and requests for more info can be added.You can find the link here: http://mikesnewsletterinvesting.blogspot.com/2006/06/about.html
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| Multiple Disciplines |
| 2008-04-01 22:43:00 |
In futhering my mental models in the spirit of Charlie Munger I've been reading pretty much non-stop on economics over the past month or two.Last night I started a new book, Discover Your Inner Economistby blogger Tyler Cowen.In the first chapter of the book Cowen talks about how to distinguish good economics from bad:The Postcard Test: In this test he recommends never buying a theory where it cannot be explained on the back of a postcard. Theories which are too complex and need to be explained on a 46-page paper then it probably has too many uncertain stepsThe Grandma Test: Before teling anyone your economic theory make sure it is intelligible enough to explain to your grandmotherThe Aha Test: If the theory is explained well it should make sense and the listener should experience an 'aha'...
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| Special Situation Complications (and a rant) |
| 2008-03-31 21:45:00 |
In my last portfolio update I talked about three special situations I held, I had to sell one of those today.Steve Madden had a tender offer where I could have tendered my shares for $20 per shares, I purchased my shares at $17.23 so this could have been a 17% return in just a few weeks.Unfortunately, I have a custodial account so when I called in to tender the shares, I was told the custodian of the account would have to call. By the time I could have reached him and had him call the deal had expired and I just recently sold my shares, fortunately I sold the shares for about $17.80 this morning so I did not have a loss on them.Currently. I have 4% in cash and 13% in special situations, which includes the 5% in Penn National. For now I will just let tha...
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| Overstock's Moat |
| 2008-03-29 12:02:00 |
You'd think I was setting this up. George saw my Overstock post and commented his opinion that Overstock does not posses a moat, so like Netflix, I'll post my thoughts on Overstock's moat.ShoppersOverstock is a more shopper friendly site than most. At Amazon you know what you want and go search for it then buy it.Overstock's site is geared more towards the shopping experience, of looking through all the deals for the day and things on big sales.It has a more random selection of items then Amazon, because it's all overstocked stuff. It would be like going to a thrift store (in Utah it would be like going to DI, I guess in other parts of the country it's like Tuesday Morning or Big Lots) where a lot of the fun is in just shopping and looking around for go...
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| Overstock's Turn |
| 2008-03-27 22:11:00 |
In keeping with this trend of using the Warren Buffett Way to evaluate all my investments, in this post I'll look at Overstock.BusinessSimple and UnderstandableOverstock sells the overstocked goods from other companies on its website. Part of its revenue comes from inventory Overstock buys from companies, the rest comes from 'partner' revenue where companies sell their inventory on Overstock's site and Overstock gets a commission.Consistent HistoryNot even close. After Overstock started it had extreme revenue growth for a few years, then Byrne got distracted and the company went to hell with negative revenue growth, currently it has come to kind of a stand still while the company attempts to turn-around.I believe that when Overstock become profitable ea...
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| The Entreprenurial Investor |
| 2008-03-26 22:16:00 |
These are my notes to the first nine chapters of The Entreprenurial Investor they are not intended to take the place of the book in any way, and I recommend everyone purchase the book - it's by far the best I've read on investing and business in a while. Entreprenurial InvestorChapter 1 Eyes Believe What You See, Ears Believe Others· Buffett said, “You’re neither right nor wrong, because other people agree with you; you’re right, because your facts and reasoning are right.”· Bernard Baruch: “Every man entitled to his own opinion, but not his own facts.”· Education w/o experience = knowledge w/o wisdom· “Your eyes believe what they see; your ears believe others” – Fortune Cookie· Kodak didn’t miss the digital cameras trend – sim...
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| Finding Stocks to Research |
| 2008-03-26 00:16:00 |
In this post I'll look at how I found all the stocks I currently own.Sears HoldingI can't find the specific article and VInvesting won't come up on my computer, but I originally got interested in Sears Holding when I read an article on that site about Eddie Lampert, his returns and the hidden value in Sears Holding.American ExpressThis idea came from my friend Joe Koster, he loves the business and couldn't believe how undervalued the stock was.After talking to him I saw a Joel Greenblatt article in this issue of Value Investor Insight, that piqued my interest and I decided to research the company.K-SwissThis pick was 100% Lynchian. I decided to research it days after the second time I read One Up On Wall Street.I got my ...
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| Changes |
| 2008-03-25 23:47:00 |
As some may have noticed I've changed the site a little bit, I updated the template on Blogger and then cleaned the sidebar and bottom of the page up.I also told it to only show five posts at a time, the archive on the side will link to previous posts, and this change will help the page to come up faster.I put my holdings on the side with their allocation percentages, and links to write-ups or posts about them. Starting with netflix, I will be putting the stocks I've sold with their respective gains or losses (starting now since I'm trying to follow how my holdings return with a change in the amount of research I do before buying, so none of the coal comapnies or other crap I lost a lot on will be there).Also, I currently have ads on the page, but am making something like 2 cents a day on ...
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| K-Swiss in the Buffett Way |
| 2008-03-24 00:06:00 |
Following the Netflix re-examination, I've decided to use the same test and try to find if K-Swiss still deserves a spot in my portfolio.BusinessSimple, UnderstandableK-Swiss makes extremely comfortable and long-lasting leather shoes. more than 2/3rds of their sales come from their classic brand which has changed little in design over the past forty years.They also are starting to focus more on tennis and hired Anna Kournikova to promote their shoe.Consistent HistoryThough earnings have dropped lately the margins and returns on capital have stayed around the industry average.Long-Term ProspectsVery favorable, they are just starting to expand internationally and management has confessed it made some bad moves domestically which are partially responsible for the earnings drop of late and wil...
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| Netflix Moat? |
| 2008-03-23 23:23:00 |
There was a comment on my Netflix post questioning the moat, here is my response:Netflix has multiple moats:It has a network effect. Each movie has reviews from multiple users on it and Netflix shows you what percent your likes and dislikes correlate with that user. This is a tremendous help in picking movies and is exponentially better than what any competitor could start with because of its millions of users.Netflix has a great rating system where one can rate each movie they rent from 1 to 5 stars, Netflix then uses this to guess how you might rank other movies, in my experience and that of many people I've talked to it is never more than one star off. This is a great lead to finding movies and its algorithms are a lot better than Blockbuster's (I've used both). The Netflix user is not ...
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| Netflix |
| 2008-03-22 11:35:00 |
With Netflix's recent run-up I decided to take a look at it using the rules from, Warren Buffett Way.
Other posts I have done in this manner are:
Netflix in June of last year, with incorrect valuation numbersBest BuyWestern UnionBusinessSimple, and UnderstandableThey have an inventory of a crapload of movies and they rent them out to people on monthly plans. Using this model they don't have to...
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| Portfolio again |
| 2008-03-19 20:40:00 |
- First Time
- Last Time
Good News
First, some college stuff. I don't know if anyone's keeping track, but I am a senior this year, so will be graduating high school in one term - 2 months and twelve days actually.
I only applied to one college, but my aunt and two cousins went there, plus I got a 28 on the ACT so I was admitted :-)The college is Westminster which is a small liberal arts...
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| McGraw-Hill |
| 2008-02-03 22:30:00 |
I just posted the research paper on McGraw-Hill (MHP) I wrote for English in Value Investing News.
-Mike...
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| Wall St. Non-Sense |
| 2008-01-06 16:32:00 |
In the two months since my last post my portfolio is down over $1,000 - that's a lot relative to the total size. Meanwhile I invested all my excess cash two months ago so now I just watch as all the companies I own fall seemingly endlessly (with the possible exception of Western Sizzlin') and I have no cash to invest in them.
I'll go over a few of them plus some other options I'm looking forward...
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| Wow |
| 2007-11-17 16:23:00 |
Anyone who has paid attention over the past few weeks knows of the carnage that originated with financials and retailers and spread its way throughout the stock market.
Anyone who is smart has already started to take advantage of this. Within the past week I've cut my Overstock.com and Netflix positions in half and sold out of Western Union to raise cash to buy good companies now selling very...
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| CGI Las Vegas |
| 2007-10-14 16:17:00 |
I recently got to go to the CGI Las Vegas meeting. Which exceded my expectations by about 14,000%. There were four amazing speakers that I took notes on and a bunch of companies also, I didn't take notes on the companies because it came too fast.
Put Options – Jeff Fischer
· Options another way to profit on companies you know very well – you just get cash up front
· Rate of success in writing...
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| Negative K-Swiss sentiments |
| 2007-07-27 15:35:00 |
I just listened to the K-Swiss conference call and came off with very negative sentiments.
Not only does management seem to be ignoring the fact that its domestic business is continuing to free fall - spent more time talking about athletes it has marketing contracts with than about it negative growth and how to fix that - Royal Elastics, who's 2006 profitability was part of my original thesis,...
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| Concentration by Default |
| 2007-07-13 17:01:00 |
My apologies for the delay from the last post I've worked a few 60+ hour weeks and am just finishing up a vacation to Chicago to get a tour at the Chicago Mercantile Exchange.
While I've been in Chicago and on the plane over here I've been able to read most of the VII issues, three books and numerous fund shareholder letters. Basically I got a refresher course on superinvestor methodology....
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| WU & NFLX |
| 2007-06-21 14:59:00 |
Western Union fell 5% yesterday on News that Verizon was letting customers transfer money with their phones. Western Union said they thought the technology was interesting and will be exploring the possibility of using it. I doubt this will have any lasting effect and it won't be long before Western Union partners with a cell phone company to do this. Even if they don't I doubt the majority of...
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| Portfolio Review |
| 2007-06-18 12:45:00 |
As promised I'll go over my current holdings before doing any 'serious' research on new holdings.
To start the total value of my portfolio is $4,841.92 (already up three freaking dollars since I started writing the article!) which is way down from the $5,380 that I have deposited into it. This is too depressing for me to calculate the returns on it right now, but last year it dipped below $4,500...
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| Western Sizzlin |
| 2007-06-14 02:58:00 |
OK this is just going to be a quick note on a company I've been researching. It's 2 AM and I want to finish my book tonight but also wanted to do a post on my day off this week.
Value
It's rare to start a post with the valuation but for a company competing in a fragmented industry with no competitve advtanges, earnings decay and trading at 45x earnings I need to keep your interest.
This...
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| Superinvestor Review: Pabrai |
| 2007-06-05 01:06:00 |
I've decided to, hopefully, go over the holdings of some superinvestors in the next few months to try to find some good opportunities.
I'll start with the superinvestor I'm most familiar with - Mohnish Pabrai.
I'll be using the data on his holdings from Guru Focus and go over the invetsments he is currently adding to or has not changed his position in. I may try to do post-mortem reverse...
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| Best Buy |
| 2007-06-02 15:03:00 |
So I had this lengthly post written out with detailed analysis on ten years of Best Buy annual reports, and at least three pages of valuation scenarios but then blogger deleted it all... OK maybe not, but I did I have an actual write-up written that got deleted, I don't have a lot of time now because I need to mow the lawn before I go to work so I'm just gonna put it through the The Warren...
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| Emotion and Some Changes |
| 2007-05-18 20:16:00 |
I always wondered why I did everything correctly for the most part but still made so many investing mistakes and never wanted to write anything about my decisions.
After every article I wrote, I saw that I had learned more from writing then just reading and for the next week or so acted as I said I should in the article.
But, then I would find a tip or hint or some kind of recommendation for a...
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| Interview with Joe Koster |
| 2007-01-19 17:50:00 |
This summer (summer of '06) I interned for a value fund in Charlotte, North Carolina. The fund is Chanticleer. I was introduced to the fund, which is intertwined with Coastal Carolina , by Joe Koster who went to Coastal and currently works for Chanticleer as an analyst. Joe e-mailed with help on analyzying insurance companies, and I offered to intern for the fund.
I eventually met Joe in person...
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| Update |
| 2006-12-18 21:24:00 |
Lazare Kaplan (LKI)
LKI was a cigar butt all the way - a profitable net-net with a lot of diamonds in inventory. I took my puff and am probably selling it late as it hasn't moved in about two months. I have a limit order set to sell at $9.5 per share, which will net me a 21% gain in just under a year.
Potential IRA to be Opened
I have about $2,000 sitting in my checking account - even after...
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| Moneyball |
| 2006-11-18 11:41:00 |
I finished Moneyball a while ago and haven't had enough time to write this review.
Moneyball: The Art of Winning an Unfair Game - 320 pages - 3.5 out of 5 stars - Writer Michael Lewis - who wrote Liar's Poker and more recently The Blind Side, which I am reading now - saw the big difference between how many wins the rich teams in Baseball get as compared to the poor teams. Every year only very...
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| Post #100 |
| 2006-11-05 12:21:00 |
Amazingly this is the 100th post on Value Investing, and a Few Cigar Butts.
My First Post was about was basically a list of the blogs I read and places I went for investing news. Origianlly the blog was started to help with a newsletter I intended to write for subscriptions.
I had been writing the newsletter for about one and a half years for people in my family and wanted to take it public and...
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