A 2013 Diversified Bullish Portfolio In 10 Positions [View article]
Roles of AMCX and KONA should be reversed - AMCX has $4B market cap vs $73M for KONA and yet you have classified AMCX as small-cap and KONA as mid-cap.
DXD and QID are not good for hedging over a period of one year (2013) because of their daily performance tracking characteristic - over a year they will perform much worse than "2x inverse". To see this, QID returned negative 18.5% over the last year while its corresponding index ETF QQQ returned positive 4.63%. A straight "2x inverse" should have been negative 9.26%. The leveraged ETFs have this problem. Please see http://seekingalpha.co... for further explanation. Also, only half the hedging requirement (negative correlation) is satisfied when using inverse market ETFs. The other half is positive expected return.
I also question whether the resultant portfolio is really a bullish bet. Since 30% of the portfolio is aimed at being "2x short" major areas of the market, the total portfolio is just 10% net long.
Berkshire BV at EOY2012 was indicated as $114,214 per Class A share. So, Buffett’s repurchase criteria would indicate the high-watermark as $137,056 (120% of BV). Around that price-range will probably act as floor for the share price as well. Current price is well above the repurchase criteria and so it may make sense to wait for a better entry point.
Apple Vs. Research In Motion: The Winner Is ... [View article]
5-10 bagger means price increase between 5-times and 10-times. For RIMM, it means an increase from $9.20 right now to a range between $46 and $92. For AAPL, it means an increase from $528 to a range between $2640 and $5280.
I actually did a quick analysis of PDLI around 12/2011 after seeing Klarman's stake increase in Q3 2011. At the time, I reached similar conclusions as Paulo. In case it helps, here are my notes from then:
The financials are fairly straight-forward: The current net-income run-rate for 2011 is around $215M. Assuming conservatively that the same run-rate will continue till 2015, there is $860M of net-income coming in against an enterprise value of $1.07B. That seems a high valuation, but there are a few factors to consider:
a) Net debt is about 230M, repayment of which will result in tax and interest savings, b) The royalty revenue stream has grown at a 17% CAGR over the last four years and that growth rate is expected to continue till 2015 – after 2015, there won’t be any more cash-flows and so the entity will probably be liquidated, and c) There is a good chance that the Roche litigation will ultimately result in a good outcome for the company. The potential payment is estimated by PDLI as over $1 billion. Genentech/Roche is the counterparty – Novartis was a party but PDLI settled with them in 2/2011 without any significant cash exchange. Genentech/Roche is continuing to pay the royalties owed under the 2003 agreement and so it seems unlikely that PDLI will end up receiving that big a payment even if they succeed in the litigation.
It is unclear what Klarman sees in this company as it looks like there is a fair amount of litigation related risk with the investment. Also, the cash-flows will stop in 4-or-so years unless they do an acquisition.
Tracking 10 Years Of Berkshire Hathaway's Investment Portfolio (Part 1) [View article]
Warren Buffett commented on not investing in tech stocks during Berkshire's 2000 Annual Meeting comment - "...we cannot understand the predictability of the economics ten years hence". The low-risk style sacrifices big home runs but also avoids big losses.
A comparative example is useful here: If Berkshire had invested its biggest stock stake ($9.43B - Coca Cola - KO) in Apple (AAPL) instead of KO in 2001, that investment would have turned into $328B compared to 'just' $13.46B reported in 2011. On the other hand, the investment may have gone to 0, if he had chosen to invest in a former tech high-flyer such as Exodus Communications that went to 0 in the aftermath of the tech bubble pop. He sacrifices the former to avoid the latter.
On GNW, do you have a link to an article/document that mentions the narrower price-ranges you quoted? - we basically looked at the price-ranges the stock traded at during those two quarters to come up with the ranges in the article.
Pershing Gold, Nearing Production And Huge Exploration Upside [View article]
This is a very relevant question. There is some precedence with respect to what SEC might consider as pumping and dumping junior gold miners. Please see http://bit.ly/10PntRZ . It is really a judgement call as to when exactly Peter can sell after writing a bullish article on such stocks - there is some correlation with respect to volume spikes immediately following his articles on PGLC but I don't know for sure how much of it is due to information that became publicly available in the same time frame.
The more interesting question for me as an SA author is whether the right thing to do morally with respect to pink sheet stocks is to stick with presenting the facts as opposed to promoting an opinion. I believe SA editors do this kind of check as well, although the system is not perfect.
Well, how do you propose to figure it out? - it is not in the 13F and they have not disclosed the information.
DVA is considered a Weschler pick only because he has owned it for a very long time before coming to Berkshire. DTV may be his pick, but there is no way to know for sure, unless they disclose - the stake was acquired in Q3 2011, about the time when Weschler joined (09/2011)...
The 13F report shows only US long positions. They represent only about one-third of their whole portfolio. The rest is in cash, foreign securities, debt, and ownership of operating businesses. The positions continually generate cash in the form of interests, dividends, and profits with the operating businesses contributing a good portion.
Given the price range Buffett could have bought it at, the current price is a good entry point to consider. But, the stake is very small and so it is premature for AXP comparison.
Why Buy Annaly? [View article]
btw, I like your writing style - keep them coming...
Regards,
John.
A 2013 Diversified Bullish Portfolio In 10 Positions [View article]
DXD and QID are not good for hedging over a period of one year (2013) because of their daily performance tracking characteristic - over a year they will perform much worse than "2x inverse". To see this, QID returned negative 18.5% over the last year while its corresponding index ETF QQQ returned positive 4.63%. A straight "2x inverse" should have been negative 9.26%. The leveraged ETFs have this problem. Please see http://seekingalpha.co... for further explanation. Also, only half the hedging requirement (negative correlation) is satisfied when using inverse market ETFs. The other half is positive expected return.
I also question whether the resultant portfolio is really a bullish bet. Since 30% of the portfolio is aimed at being "2x short" major areas of the market, the total portfolio is just 10% net long.
Regards,
John.
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q1 2013 Update [View article]
Regards,
John.
Apple Vs. Research In Motion: The Winner Is ... [View article]
Regards,
John.
The Problem With PDL BioPharma [View article]
I actually did a quick analysis of PDLI around 12/2011 after seeing Klarman's stake increase in Q3 2011. At the time, I reached similar conclusions as Paulo. In case it helps, here are my notes from then:
The financials are fairly straight-forward: The current net-income run-rate for 2011 is around $215M. Assuming conservatively that the same run-rate will continue till 2015, there is $860M of net-income coming in against an enterprise value of $1.07B. That seems a high valuation, but there are a few factors to consider:
a) Net debt is about 230M, repayment of which will result in tax and interest savings,
b) The royalty revenue stream has grown at a 17% CAGR over the last four years and that growth rate is expected to continue till 2015 – after 2015, there won’t be any more cash-flows and so the entity will probably be liquidated, and
c) There is a good chance that the Roche litigation will ultimately result in a good outcome for the company. The potential payment is estimated by PDLI as over $1 billion. Genentech/Roche is the counterparty – Novartis was a party but PDLI settled with them in 2/2011 without any significant cash exchange. Genentech/Roche is continuing to pay the royalties owed under the 2003 agreement and so it seems unlikely that PDLI will end up receiving that big a payment even if they succeed in the litigation.
It is unclear what Klarman sees in this company as it looks like there is a fair amount of litigation related risk with the investment. Also, the cash-flows will stop in 4-or-so years unless they do an acquisition.
Regards,
John.
Tracking 10 Years Of Berkshire Hathaway's Investment Portfolio (Part 1) [View article]
A comparative example is useful here: If Berkshire had invested its biggest stock stake ($9.43B - Coca Cola - KO) in Apple (AAPL) instead of KO in 2001, that investment would have turned into $328B compared to 'just' $13.46B reported in 2011. On the other hand, the investment may have gone to 0, if he had chosen to invest in a former tech high-flyer such as Exodus Communications that went to 0 in the aftermath of the tech bubble pop. He sacrifices the former to avoid the latter.
Regards,
John.
Tracking Seth Klarman's Baupost Group Holdings - Q4 2012 Update [View article]
On GNW, do you have a link to an article/document that mentions the narrower price-ranges you quoted? - we basically looked at the price-ranges the stock traded at during those two quarters to come up with the ranges in the article.
Regards,
John.
Tracking Bill Ackman's Pershing Square Portfolio - Q4 2012 Update [View article]
Forcing involuntary bankruptcy is a story that is making the rounds. See http://bit.ly/14UCqHv . Thanks for bringing this up.
Regards,
John.
Pershing Gold, Nearing Production And Huge Exploration Upside [View article]
The more interesting question for me as an SA author is whether the right thing to do morally with respect to pink sheet stocks is to stick with presenting the facts as opposed to promoting an opinion. I believe SA editors do this kind of check as well, although the system is not perfect.
John.
Tracking David Einhorn's Portfolio - Q3 2012 Update [View article]
Regards,
John.
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q3 2012 Update [View article]
Here you go: http://bit.ly/10HTDln . I added a couple of columns to include the percentage holdings info.
Regards,
John.
Tracking David Einhorn's Portfolio - Q3 2012 Update [View article]
Regards,
John.
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q3 2012 Update [View article]
DVA is considered a Weschler pick only because he has owned it for a very long time before coming to Berkshire. DTV may be his pick, but there is no way to know for sure, unless they disclose - the stake was acquired in Q3 2011, about the time when Weschler joined (09/2011)...
Regards,
John.
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q2 2012 Update [View article]
Regards,
John.
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q1 2012 Update [View article]