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Lucas Krupinski

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  • If I Could Buy Just One Stock, It Would Be This One [View article]
    You're saying that the reason he doesn't take more pay is so that he can report to us that his secretary pays a greater proportion of her income in taxes than he does? And what exactly does that accomplish?

    It is amusing that that earlier in the thread, people were arguing that Buffett must take home a lot of money that somehow doesn't get reported, and now the argument is that he simply chooses not to take much pay in order to score a political point. At least now we're acknowledging that his pay is a pittance compared to any other CEO, for whatever reason we think he chooses for that.

    No - corporate america needs more buffetts at the helm of their companies - executives who have most if not all of their networth invested in the company they run. And these investments come from their own pocket - i can hardly see how awarding an execuitve a ton of options or restricted stock aligns their interests with their shareholders - itr's all found or free money, after all. But take an executive with a liquid networth of $10mm and have then invest $9.5 mnillion in the company they run, and then you'll see interests aligned with the shareholders.
    Apr 27, 2013. 02:25 AM | 4 Likes Like |Link to Comment
  • Invest Like A Rounder: Don't Give Anything Away [View article]
    24% sales growth, sure that's impressive. But with everyone freaking out about Apple's 40% margins falling to 35%, why aren't any analysts pointing at Amazons margins?

    But if you look at it - their total revenue has gone from $34 bn in 2010 to $48mm in 2011 to $61mm in 2012. Meanwhile their operating income was $1.4 bn in 2010, fell to $862mm in 2011 and fell again to $676 mm in 2012. What's the point of rapidly increasing sales by cutting prices if your actual profit falls as a result?

    I'm comfortable holding a short on it for a while if need be. There isn't a time limit for the call to come turn out correctly - borrow rate is very low and i'm constraining myself to a time table like if i used options.
    Apr 26, 2013. 08:56 PM | 1 Like Like |Link to Comment
  • How To Reduce (Or Eliminate) Taxes On Annaly's Dividends [View article]
    So, you're turning ordinary income (a REIT distribution) into a short term capital gain (assuming you're capturing the distribution every quarter), adding on trading commissions, and hoping to offset it with other losses you have laying around?

    Might work, and though I'm not a follower of NLY, it seems to me that AGNC always drops an amount slightly less than the distribution they pay out each ex-date. If NLY does that, you're losing a few pennies per quarter. And,some people might be so fortunate to not have any more losses to use up. Might especially be the case if they churn through their portfolio like this for several quarters.
    Apr 26, 2013. 04:58 PM | Likes Like |Link to Comment
  • Why The 'Gold Bull And Equities Bear' Camp Is Far Off Base [View article]
    Banks don't hate gold. They could just as easily lend out dollars backed by gold as they do dollars that aren't backed by gold. Just as the US government could still borrow gold from china rather than selling it T-bills. Gold changes nothing about how the world operates, it just substitutes one evil for another.
    Apr 26, 2013. 04:52 PM | 2 Likes Like |Link to Comment
  • Invest Like A Rounder: Don't Give Anything Away [View article]
    Clear winner? Sure, that's what they said 15 years ago as well. And when it finally does emerge as the clear winner, they will have so destroyed the markets in which they compete that there will be next to no margin left for anyone to claim. And should they start raising prices in order to generate operating margin, that just opens the door for their competitors to get back in the game.

    I'm sorry, I think Amazon is fantasy. If they're going to do such fantastic things 10 years out, then assign the that value when they get there, not today.

    Disclaimer: Short AMZN
    Apr 26, 2013. 04:38 PM | 3 Likes Like |Link to Comment
  • If I Could Buy Just One Stock, It Would Be This One [View article]
    $100,000 salary. $75,000 in director fees from subsidiaries that he sits on the board of. Use of the corporate jet. That's peanuts for the CEO of a $200 billion dollar company. Look at the pay for ANY other S&P 500 company and tell us which CEO is paid less.

    And, if he were running Berkshire as a feeder to a hedgefund (as, say, Einhorn does with Greenlight Re), he plausibly could collect 2/20 from Berkshires investment in the fund - that could equate to compensation of $4,000,000,000 per year before even talking about performance fees.

    If the rest of corporate america took its cue from Berkshire for its executive compensation, well, there'd be a lot more money to go around to the actual owners (shareholders) of the companies.
    Apr 26, 2013. 12:51 AM | 4 Likes Like |Link to Comment
  • If I Could Buy Just One Stock, It Would Be This One [View article]
    Look up what ponzi scheme actually means. It's a defined term, which has nothing to do with what you're talking about.

    You pay no sales commissions, which are, what, $9.99 at TD Ameritrade? $7 at Etrade? But you do pay tax on the entire dividend, rather than just paying tax on the portion of your sale that is an actual gain.

    Lets say that Berkshire's B shares are at $100/share. You own 1,000 shares of it, and your cost was $75/share.

    Berkshire could pay you a 2% dividend ($2,000), of which you'll then have to pay 20% of to Uncle Sam, leaving you with $1,600 effectively.

    Or, you can sell 20 B Shares in order to raise that same $2,000. Since your cost was $1,500, your gain is only $500. 20% capital gain tax is $100.

    So - you take our $2,000 as a dividend, you get to keep $1,600, versus selling $2,000 worth of shares and keeping $1,900 of it. Oh yeah, and you have to pay a commission of $10, maybe.
    Apr 26, 2013. 12:43 AM | 2 Likes Like |Link to Comment
  • If I Could Buy Just One Stock, It Would Be This One [View article]
    If he'd been paying out dividends all this time, then Berkshire would be a tiny fraction of the size that it is - it's those retained earnings that have given him the capital to deploy either in the public markets or just snapping up whole companies.

    He's been very clear what his game plan has been and will be; so there aren't any holders of the stock that bought expecting a dividend. I don't see why it's an issue for you to sell a few shares per year to generate the cashflow you'd like to see from the investment? Yes that would be an issue if all that existed were A shares. But with the B's, especially since the split that resulted from buying Burlington Northern, it's easy to sell a few shares to generate cash flow.

    SPY yields 2% - creating a 2% "dividend" from Berkshire shares wouldn't be a challenge. And the tax effect could be dramatically better (paying 20% tax on the entire dividend, versus paying 20% on only the portion of your sale that constituted a gain, if you're in the top bracket). Far better economically for you, the shareholder, to create your own dividend by selling 0.5% of your holdings each quarter (less, in fact, if you wanted to replicate the after tax figures).

    I do love dividends myself. But even more, I wish I could find true growth companies that are lead by management who act as great stewards. Yes, there are tons of "growth" companies out there, just being a growth company isn't the same as being a company that has been run truly for its shareholder benefit
    Apr 26, 2013. 12:34 AM | 2 Likes Like |Link to Comment
  • If I Could Buy Just One Stock, It Would Be This One [View article]
    I'm a big fan of dividends (nearly every holding in my portfolio is a dividend payer, save for BRK-B and WRLD out of 30 or 35 positions), but the flip side to that is that had he owned BRK-A or B for 20 years, yes, no dividends were paid, but there was also no drag imposed on him for paying Uncle Sam his levy.

    If he'd bought just a single share of BRK A on January 31, 1993, he would have laid out $12,100, which would have turned into $161,000 today. Had Berkshire paid a 3% dividend all those years, and even if those dividends were reinvested into more Berkshire shares, the ending balance of that investment would be quite a bit smaller, just by virtue of the taxes paid during that time. I'd be more specific, but it's late and I don't feel like firing up Excel.

    Dividends go both ways - they are a a huge factor in investment returns, but there is a tax hit (if they're not held in a tax advantaged account) that can really compound over the period of years.

    Myself, I'm a fan of dividends. A - the cashflow they generate can be used to diversify a portfolio, B - dividends have been a HUGE source of the total stock market return over the past century, and C - a company paying a stable dividend essentially creates a basic floor for its stock price.

    Finding a company that trully can reinvest its profits and achieve a better overall result for the investor than had they turned those profits over to the shareholders for them to deceide to invest in, well, that's a challenge. I'd love to find a company like that to invest in, but I'm not seeing very many choices that excite me.
    Apr 26, 2013. 12:21 AM | Likes Like |Link to Comment
  • If I Could Buy Just One Stock, It Would Be This One [View article]
    I'm not Martin, but I do think there'll definetly be some short term tumult upon Warren leaving the company, however he ends up doing it. But He's put together a fantastic portfolio of stable businesses. The new investment managers will certainly have to prove themselves in the eyes of the shareholders, but I'd assume that upon his passing, Berkshire will institute a dividend. Nothing huge - the company will likely continue in its strategy of investing excess insurance float in the equity market, but I do think that it will stop retaining as many earnings as it does currently.

    Time will tell. But as Warren himself says over and over, Berkshire's size is its biggest detriment - there simply aren't that many more investments that he can make that can move the needle very much. Lacking investment opportunities and having a pair of investment managers that the shareholders are so far unfamiliar with, instituting a dividend would seem like the easiest way to placate those owners.
    Apr 25, 2013. 11:51 PM | Likes Like |Link to Comment
  • The Apple-Microsoft Comparison Is Valid [View article]
    Yeah - P/E is something that detractors seem to gloss right past. When AAPL's shares were trading in the $600's and $700's, detractors would go after the "unsustainable" share price as if Apple was trading at multiples like Amazon's or Netflix's, not at cheaper multiples than just about any other large cap stock out there.

    I'm out of the stock for now. Took some gains when it went up, and had a small bite taken out of those gains when it fell, so I'm just waiting for enough time to pass so a repurchase won't trigger a wash sale, and hoping the share price stays where it is or falls even furtther for the next few weeks so that I can start accumulating shares are a reasonable price.
    Apr 25, 2013. 11:38 PM | 2 Likes Like |Link to Comment
  • The Haze Lifts: 96% Of Medical Marijuana Inc. Q4 Sales From Questionable Transaction [View article]
    Well written article. And i want to put this is the least offensive way possible, but why do you expend so much energy writing about MJNA? I mean, last I looked, there was a DTC chill on the stock, so as much as anyone agrees or disagrees, they can't take action no matter how strongly they feel about it. At least, I've read reports that Ameritrade doesn't allow transactions due to the chill, and I tried to short via Interactive Brokers and had the same result.

    Point being - the research, analysis and presentation are all great, but why not apply it to a company that you and we can open and close positions in? Say CBIS, or any of the others>
    Apr 25, 2013. 11:29 PM | Likes Like |Link to Comment
  • Physical Gold Vs. Paper Gold: The Ultimate Disconnect [View article]
    My link is to an investor relations page on Goldcorps website.
    Apr 24, 2013. 08:37 PM | 1 Like Like |Link to Comment
  • Physical Gold Vs. Paper Gold: The Ultimate Disconnect [View article]
    Some things just shouldnt' be included in the "true" cost. Executive compensation, for instance, since you can merge two miners together and get rid of half the executives. Or if shareholders could vote on pay, that would be another way to lower that figure.

    Right now, gold miners are very profitable - but that's allowed their overhead to bloat up. Give them a lower price to sell gold at, and I'll bet top dollar that most of them figure out ways to cut costs and keep the operation going. So you can't just look at their current company wide expenditures and say "well, that's how much it costs to run the company, that's how much it cost to produce x ounces of gold"
    Apr 24, 2013. 08:36 PM | 4 Likes Like |Link to Comment
  • Physical Gold Vs. Paper Gold: The Ultimate Disconnect [View article]
    Why is everyone citing the cash cost of gold at $1200 or $1300 per ounce, when say, Goldcorp, pegged their own costs at being below $500 per ounce in January 2013?

    What motivation would Goldcorp have for understating their costs by that much? I can't think of any. But I can think that people wanting to justify gold pricing at current and higher levels would want to do as much as they could to inflate the perceived production costs in order to make other investors feel like there is a solid floor that they are standing on...
    Apr 24, 2013. 01:45 PM | 14 Likes Like |Link to Comment