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I was in a live(in a casino) $1-$2 blind no limit cash game. My position was in the big blind(BB). The player utg+2 raises to $15. He has played very tight, so I give him a range of AQ,AK,JJ,QQ,KK,AA. Four other players call before it gets back to me.

(click to enlarge)

My pot odds are 5/1 or 16%. Given that i most likely have live cards(someone not having Q5 etc), unlikely to have reverse implied odds(The event that even if i hit what im looking for, someone beats me), and the unlikely event that the initial raiser will lay down top-top or aces, there is value in the call. The pot is $90.

The flop comes A 3 4 with two clubs.

Being first to act, I check. The original raiser bets $30. Two players call. So, pot odds to me are (90+90)/30 = 6/1 or 14%. In analyzing the value of the proposition, i analyze possible ranges for each opponent. I keep the range for the raiser. One of the callers probably has Ax and the other probably has a flush draw. This is of course speculative, but a probable occurrence.

If a 2 or 6 comes I win. But given the clubs, ill discount the 2 and 6 of clubs as outs to be conservative. So I have 6 outs. Using the law of 4, im approximately 24% to win. I call given a 24% of winning and a cost of 14%. The pot is $190.

The turn is a King non club. The board is A 3 4 K with two clubs.

I check again. The raiser bets $50. The other two players fold. This information is dynamic and changes the valuation.

First, its unlikely he has AA, KK, or AK. With two clubs on the board, and three people who called his flop bet, if he had AA,KK,AK he would bet more than 1/4th the pot to protect his hand. Its unlikely he would keep betting if he had an underpair like QQ or JJ with two overcards and three opponents. Given this, AQ seems likely.

Second, since the other players folded, i can add back the 2 and 6 of clubs to my outs; providing a total of 8 outs.

I am receiving pot odds of approximately 5/1 or 16%. Using the law of 2, I have a 16% of hitting one of my outs. Michael Price has a saying: "I like to buy the steak for 80 cents on the dollar, and pay nothing for sizzle". In this scenario, I was paying face for the steak, but getting the sizzle for free. What was the sizzle? It is the area of speculation. It came in two places in this particular hand.

If the 18% hits, meaning a 2 or 6 rolls off on the river, i will bet something like 1/4th to 1/2 the pot and often get called. Lets make it an even $100 bet. A 6 or 2 on the river looks unlikely to make my hand. This is implied value.

There is also bluff value. If a club comes on the river, which is 11 outs, (but will discount the 2 and 6 because that would be a value bet) then I can bet 2/3 to whole pot to induce a fold. Im able to do this because of perception. A flush is alot more visible of a draw than a strait. Most players in my situation would also be drawing for a flush in this situation, and im certain he perceives that.

Im getting the steak for face but getting another $390 at 18%, and $290 also at 18% for free; with the percentages being independent. The expected value could be calculated as (390*18% + 290*18%) - (50*64%) = 122 - 32 = $90. I call.

The river is a 9 non club. I check and he checks behind showing AQ. Just what i rationally expect to occur 64% of the time. Although the card didnt roll my way, what a wonderful game!

This instablog was written for the January 2013 Wildcat Investors Newsletter.

"Investing is a probabilities game, not a certainties game" - Ken Fisher

Investing and poker share many attributes. One of the decision making tools I utilize in both disciplines is expected value. Expected value provides the ability to make decisions when faced with probabilities. In practice, using expected value in a poker hand, as well as investing, rewards those that are able allocate accurate probability weights.

I will examine the art and science of expected value through a poker hand I played last April. There were three limpers before me. I limped from late position with K 6 off suit. The cutoff (person to my left) called and blinds completed. The pot is $14. Flop: 7s 6c 2c. It limped around to me and I bet $11. The cutoff called and everyone else folded. The pot is $36. Turn: j hearts. I bet $22 and he raised to $75. I called. The pot is $186. River: 2. The board was 7 6 2 j 2 with no flush possibility. I checked and my opponent goes all in for $125. The pot is $311.

There are two primary variables to calculating expected value; the amounts won/lost, and the probability of winning/losing. The amount won/lost is fairly straightforward to calculate. If I win, the payoff is $311 to a $125 investment; equating my breakeven to (2.5/1), or approximately 30%. The difficult part is assigning accurate probabilities given the information. Information can come in many ways, betting patterns, past history, tells, etc. I like to take each piece of information as it moved through time separately, and then cross reference it. That means looking at how he played the hand preflop-flop-turn-river individually, than as a complete puzzle.

The way he played, I am confident he has value combinations (hands that beat me) of 67, 6j, 7j, or 22. Bluff combos are 89,45,58, 45c,34c,9tc,tjc,jqc,q9c,q8c,a3c,a4c,a5c. As you can see, the bluff hands outnumber the value hands. In fact, I have approximately 65% equity with just my pair of sixes against his estimated range (Remember, this is a blend of subjective & a priori probability).

To calculate expected value from the call, I multiply the payoff with the probability of success, and then subtract the product of the amount loss with the probability of loss. This looks like: (311*.65 - 125*.35) = $158. This means that every time I make this call, I theoretically make $158, regardless of what hand he shows.

Strangely, but not surprisingly, the director of investor relations has resigned. Personally, i wish he would have been fired a long time ago. We could never get a hold of him through the six months we followed the stock. The entire companies investor relations was an enigma.

What is interesting about the resignation is the terms on which Mr. Archbold is leaving. He is receiving $1.5mm and has signed a "General Release and Waiver Agreement". The 8k does not give detail or reference into either of these agreements. My speculation is that Mr. Archbold has info materially damaging to the board, executives, tariko, or all of the parties.

It is not logical that a company whose current convertible sub debt is distressed and equity at $.65 would give someone in PR a parachute.

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## Accounting For Value In A Poker Hand

I was in a live(in a casino) $1-$2 blind no limit cash game. My position was in the big blind(BB). The player utg+2 raises to $15. He has played very tight, so I give him a range of AQ,AK,JJ,QQ,KK,AA. Four other players call before it gets back to me.

(click to enlarge)My pot odds are 5/1 or 16%. Given that i most likely have live cards(someone not having Q5 etc), unlikely to have reverse implied odds(The event that even if i hit what im looking for, someone beats me), and the unlikely event that the initial raiser will lay down top-top or aces, there is value in the call. The pot is $90.

The flop comes A 3 4 with two clubs.

Being first to act, I check. The original raiser bets $30. Two players call. So, pot odds to me are (90+90)/30 = 6/1 or 14%. In analyzing the value of the proposition, i analyze possible ranges for each opponent. I keep the range for the raiser. One of the callers probably has Ax and the other probably has a flush draw. This is of course speculative, but a probable occurrence.

If a 2 or 6 comes I win. But given the clubs, ill discount the 2 and 6 of clubs as outs to be conservative. So I have 6 outs. Using the law of 4, im approximately 24% to win. I call given a 24% of winning and a cost of 14%. The pot is $190.

The turn is a King non club. The board is A 3 4 K with two clubs.

I check again. The raiser bets $50. The other two players fold. This information is dynamic and changes the valuation.

First, its unlikely he has AA, KK, or AK. With two clubs on the board, and three people who called his flop bet, if he had AA,KK,AK he would bet more than 1/4th the pot to protect his hand. Its unlikely he would keep betting if he had an underpair like QQ or JJ with two overcards and three opponents. Given this, AQ seems likely.

Second, since the other players folded, i can add back the 2 and 6 of clubs to my outs; providing a total of 8 outs.

I am receiving pot odds of approximately 5/1 or 16%. Using the law of 2, I have a 16% of hitting one of my outs. Michael Price has a saying: "I like to buy the steak for 80 cents on the dollar, and pay nothing for sizzle". In this scenario, I was paying face for the steak, but getting the sizzle for free. What was the sizzle? It is the area of speculation. It came in two places in this particular hand.

If the 18% hits, meaning a 2 or 6 rolls off on the river, i will bet something like 1/4th to 1/2 the pot and often get called. Lets make it an even $100 bet. A 6 or 2 on the river looks unlikely to make my hand. This is implied value.

There is also bluff value. If a club comes on the river, which is 11 outs, (but will discount the 2 and 6 because that would be a value bet) then I can bet 2/3 to whole pot to induce a fold. Im able to do this because of perception. A flush is alot more visible of a draw than a strait. Most players in my situation would also be drawing for a flush in this situation, and im certain he perceives that.

Im getting the steak for face but getting another $390 at 18%, and $290 also at 18% for free; with the percentages being independent. The expected value could be calculated as (390*18% + 290*18%) - (50*64%) = 122 - 32 = $90. I call.

The river is a 9 non club. I check and he checks behind showing AQ. Just what i rationally expect to occur 64% of the time. Although the card didnt roll my way, what a wonderful game!

## Expected Value In Poker

This instablog was written for the January 2013 Wildcat Investors Newsletter.

"Investing is a probabilities game, not a certainties game" - Ken Fisher

Investing and poker share many attributes. One of the decision making tools I utilize in both disciplines is expected value. Expected value provides the ability to make decisions when faced with probabilities. In practice, using expected value in a poker hand, as well as investing, rewards those that are able allocate accurate probability weights.

I will examine the art and science of expected value through a poker hand I played last April. There were three limpers before me. I limped from late position with K 6 off suit. The cutoff (person to my left) called and blinds completed. The pot is $14. Flop: 7s 6c 2c. It limped around to me and I bet $11. The cutoff called and everyone else folded. The pot is $36. Turn: j hearts. I bet $22 and he raised to $75. I called. The pot is $186. River: 2. The board was 7 6 2 j 2 with no flush possibility. I checked and my opponent goes all in for $125. The pot is $311.

There are two primary variables to calculating expected value; the amounts won/lost, and the probability of winning/losing. The amount won/lost is fairly straightforward to calculate. If I win, the payoff is $311 to a $125 investment; equating my breakeven to (2.5/1), or approximately 30%. The difficult part is assigning accurate probabilities given the information. Information can come in many ways, betting patterns, past history, tells, etc. I like to take each piece of information as it moved through time separately, and then cross reference it. That means looking at how he played the hand preflop-flop-turn-river individually, than as a complete puzzle.

The way he played, I am confident he has value combinations (hands that beat me) of 67, 6j, 7j, or 22. Bluff combos are 89,45,58, 45c,34c,9tc,tjc,jqc,q9c,q8c,a3c,a4c,a5c. As you can see, the bluff hands outnumber the value hands. In fact, I have approximately 65% equity with just my pair of sixes against his estimated range (Remember, this is a blend of subjective & a priori probability).

To calculate expected value from the call, I multiply the payoff with the probability of success, and then subtract the product of the amount loss with the probability of loss. This looks like: (311*.65 - 125*.35) = $158. This means that every time I make this call, I theoretically make $158, regardless of what hand he shows.

## CEDC Investor Relations Director Resigns With Benefits

Strangely, but not surprisingly, the director of investor relations has resigned. Personally, i wish he would have been fired a long time ago. We could never get a hold of him through the six months we followed the stock. The entire companies investor relations was an enigma.

What is interesting about the resignation is the terms on which Mr. Archbold is leaving. He is receiving $1.5mm and has signed a "General Release and Waiver Agreement". The 8k does not give detail or reference into either of these agreements. My speculation is that Mr. Archbold has info materially damaging to the board, executives, tariko, or all of the parties.

It is not logical that a company whose current convertible sub debt is distressed and equity at $.65 would give someone in PR a parachute.