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Michael Orwin  

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  • Seeking Hong Kong-Listed Net-Nets As Deep Value Investment Opportunities [View article]
    For an explanation of the Beneish M-Score, see "The M-Score Explained" http://seekingalpha.co... . For an explanation of why the negative coefficients need an explanation, see my comment at the bottom.
    Aug 31, 2015. 08:05 PM | Likes Like |Link to Comment
  • Buffett Goes Big With Latest Acquisition: Further Upside Ahead, Following Dip In Price [View article]
    I'd appreciate thoughts on how 3D printing is likely to affect Precision Castparts. For a little background - "GE's bestselling jet engine makes 3-D printing a core component" March 5, 2015 (fortune.com) http://tinyurl.com/pt8... .
    Aug 30, 2015. 10:52 PM | Likes Like |Link to Comment
  • Buffett Goes Big With Latest Acquisition: Further Upside Ahead, Following Dip In Price [View article]
    "Banks tend to do very well in a rising interest rate environment"

    There's a contributor who argues that bank stocks do not do well when interest rates rise, Donald van Deventer, "Bank Stock Prices And Higher Interest Rates: Lessons From History" June 18, 2015 http://tinyurl.com/oq7... .
    Aug 30, 2015. 10:29 PM | Likes Like |Link to Comment
  • Finding Dividend Growth Before Anyone Else [View article]
    IMO a ten year chart of EMN shows growth and volatility, also IMO the stock is probably best considered as a risk/reward proposition when it's beaten down.

    I searched the earnings call on Seeking Alpha http://seekingalpha.co... for "price", and there are 25 instances. Checking them shows that output prices depend on input prices. There's one case where prices are described as "sticky" but I'm not inclined to put a lot of weight on that. In other words, even with EMN being more "specialty" than previously, they don't have pricing power. They might still keep reasonably good margins through efficiency or having better products than the competition, but for a company with a lot of debt in cyclical markets I don't want to bet on margins holding up in a downturn.

    There are ten years of margins and other metrics on Morningstar http://tinyurl.com/ont... but I don't regard Morningstar's figures as being reliable.
    Aug 30, 2015. 07:00 PM | Likes Like |Link to Comment
  • SunEdison Devco Breakeven Quarter? [View article]
    Thanks Chopra922.
    Aug 28, 2015. 05:54 AM | Likes Like |Link to Comment
  • Monday's Market Action Reminds Me Of October 1987 [View article]
    I once thought of two rules, 1) only buy as much of a stock so that if the price goes down, you're as happy about being able to buy more at the lower price as you are disappointed about the stock you've bought having a lower market value. 2) never buy more of a stock at a lower price if you find you broke rule 1. I thought of them after buying too much of an undervalued insurer, which meant I didn't want to risk adding when they got cheaper. It's an odd pair of rules though, as they're about how you feel about investments. They're hard to back test, and I don't mean to advocate them.
    Aug 28, 2015. 12:50 AM | 1 Like Like |Link to Comment
  • Monday's Market Action Reminds Me Of October 1987 [View article]
    "I aged a 10 years the three months from August to October, 1987."

    That's a point in favor of long term investment based on fundamentals. I'm assuming that traders using their own money felt as bad as professionals using other people's money, and I don't mean to knock anyone's career choice.
    Aug 28, 2015. 12:47 AM | Likes Like |Link to Comment
  • Is A Stronger U.S. Dollar Really Bad News For Emerging Markets? 3 Myths Debunked [View article]
    Thanks for writing about the subject. I'm interested in it because in my own small way I've been warning about the risk from the trillions of offshore dollar denominated debt, since November. I have not been as well informed, as early, or as certain as other commentators.

    I don't understand how intelligent people can be so certain on both sides of complicated issues, unless there are many less certain people who aren't noticed because readers like certainty.

    I have to admit I don't understand all your points. Maybe it's just me, maybe I'll understand on a later reading, or maybe you aren't aiming for the general audience that people like Worth Wray and John Mauldin (who would disagree with you) write for.

    I can see that you use correlation in your argument. I'm a bit wary of correlation, for example rich people consume more than poor people, but it doesn't mean you get rich by consuming more. In that example it's clear how the causation works, but in many cases it's not clear.

    I agree that conditions are different to before the Asian crisis in the 1990s. I've read that the IMF insisted on countries freeing the movement of capital before giving loans then, which may have added to the damage, and it's been claimed that China's capital controls kept them out of trouble. I've also read that now it's businesses that have the debt rather than countries, although that might not be true everywhere.

    I still think there's a risk of the dollar denominated debt going bad and causing a flight to safety, most likely to the US although lately there's been a flow into the Japanese yen. As before, I can only say it's a risk, not a certainty, though someone with good enough information and analysis might be clear and correct about deciding one way or the other. Sentiment plays a role here, and I think that's difficult to predict.

    On the other hand, a local currency that's down against the dollar benefits exporters to the US, and there are similar effects for other currencies such as the rate against the Euro. I'm wondering if there could be something like "Chimerica", where a high US dollar, low commodity prices, low interest rates and cheap manufacturing overseas leads to the US leaning more towards services and consumption, with nail bars and shopping malls rather than industry. Of course a lot of heavy industry turned into rust belt a long time ago, and I don't expect a close repeat of Chimerica. Anyway I've adjusted my portfolio over the past year to catch such an effect, but I'm not making a big bet on it. The possible effect of income and wealth inequality would go the other way (as in the "hourglass economy", "average is over" etc.).
    Aug 26, 2015. 12:38 PM | Likes Like |Link to Comment
  • White Mountains Insurance Group Is Preparing For A Financial Storm [View article]
    According to the nytimes piece "Sumitomo Life of Japan to Buy Symetra Financial for $3.8 Billion" http://nyti.ms/1Uc5IYN , White Mountains and Berkshire Hathaway both agreed to vote in favor of the acquisition. It seems reasonable to have taken the >30% premium.

    BTW I sold my WTM shares.
    Aug 25, 2015. 07:26 PM | Likes Like |Link to Comment
  • White Mountains Insurance Group Is Preparing For A Financial Storm [View article]
    "the risk of a supervolcanic eruption in our lifetimes is pretty darn small"

    I expect so, as according to the bbc http://bbc.in/1MSaR9q the last one was 74,000 years ago, in Indonesia, and the last one at Yellowstone was 640,000 years ago.

    Going further off-topic, I read once how scientists didn't believe mariners' tales of "rogue waves", because of the scientists' assumptions about the probability distribution of the wave size. Now the scientists have identified mechanisms. There's something on NOAA about it if you're interested. http://1.usa.gov/1MSaPhR
    Aug 25, 2015. 07:11 PM | Likes Like |Link to Comment
  • White Mountains Insurance Group Is Preparing For A Financial Storm [View article]
    I'd say fairly "long tail". The triangular insurance table for Sirius in the 10-K for 2014 has 3,065.3 ($ million) for the ultimate cost of claims unpaid as at year end 2004. The cumulative amount paid 10 years later (in 2014) is 2,561.4, so the difference has still not been paid out after ten years.

    Also, "The casualty reduction is net of a $10 million increase in asbestos and environmental loss reserves.". A&E is very long tail and has typically been under-estimated by insurers, for decades. It's probably no longer a major concern at Sirius, but IMO it illustrates how risky insurance can be.

    There's a paragraph about the effect of inflation -

    "Sustained Economic and Tort Inflation . Future inflation beyond the recent historical levels could impact the required reserves. For example, Sirius America has casualty and runoff loss reserves of roughly $385 million excluding asbestos and environmental at the end of fourth quarter 2014. The estimated additional claim payments for Sirius America due to hypothetical increases in the inflation rate of 200 to 800 basis points beginning in 2017 and continuing through 2021 is estimated to be $36 to $182 million."
    Aug 25, 2015. 06:39 PM | 1 Like Like |Link to Comment
  • India's Massive Solar Ambitions Are Taking Shape [View article]
    Anand, what do you think about the potential of off-grid solar PV in rural India? I'm thinking at least there won't be any smog.
    Aug 25, 2015. 10:43 AM | 1 Like Like |Link to Comment
  • White Mountains Insurance Group Is Preparing For A Financial Storm [View article]
    I don't agree with "Selling Sirius at WTM is the equivalent of Warren Buffett selling Geico at Berkshire Hathaway". Berkshire Hathaway has a long-standing policy of not selling subsidiaries, to reassure owners that Berkshire is a good home for businesses, because some owners care about that, having founded a business or put a lot of effort into building it up. Warren Buffett's notable skill at allocating capital means there's more to lose if the insurance float is reduced by selling an insurance subsidiary. GEICO had a unique business model in it's day, selling direct to government workers, and early value investors recognized the value of the model when skeptics said you couldn't sell insurance without advertising. If Sirius had a unique business model, I haven't heard about it.
    Aug 23, 2015. 07:41 PM | Likes Like |Link to Comment
  • India's Massive Solar Ambitions Are Taking Shape [View article]
    I've posted this link before, but it's a fairly balanced piece about the batteries SUNE has ordered for India, and the company that makes them. "Pressure Mounts on Imergy to Prove Vanadium-Redox Flow Battery" http://bit.ly/1IQWXy3 .
    Aug 22, 2015. 09:56 PM | Likes Like |Link to Comment
  • White Mountains Insurance Group Is Preparing For A Financial Storm [View article]
    You might be interested in "Natural Disasters: Top 10 U.S. Threats" http://bit.ly/1MKPeYB which includes earthquakes, tsunamis and supervolcanoes. Also, it's been in the news that pumping water out of the ground in California has caused subsidence, but there could also be an opposite effect as there's less weight pushing the land down. Those might increase the risk of earthquakes, but maybe not soon because there's an annual effect anyway from snow building up and melting. See "California's Thirst Triggers Earthquakes, Lifts Mountains" http://bit.ly/1MKPeYF but it's over a year old and there might be something more recent. Both links are on livescience.com

    I did some googling after reading in Employers Holdings' earnings call, something about the only big effect that would blow their modeling would be from terrorism or quakes. Employers Holdings insure for workers compensation and they have significant exposure in California.
    Aug 22, 2015. 05:49 PM | Likes Like |Link to Comment
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