The Secret Of Warren Buffett's Alpha [View article]
Good article. The "stable" part of the leverage equation is extremely important. Buffett does not like to use leverage that is subject to margin calls. If you look at how he set up his fairly recent put trades on stock indexes, he made sure that none of them were subject to collateral or margin calls between now and the settlement date. If you are subject to collateral requirements you can get squeezed out of your holdings at exactly the wrong times.
The principle of accessing and using a stable, low cost source of financing and then investing stable, higher return assets is perhaps the most powerful wealth building formula that exists - The reason so many large fortunes have been made in real estate and private equity.
The Better Burger Threat To McDonald's [View article]
McDonald's is not a burger restaurant anymore, it is a low cost convenience restaurant where burgers are just one item on an increasingly diverse menu. Here is the current menu, note just 12 of the items are various "burgers".
The real competitive advantages of McDonalds are its world class business systems, brand name, and strong record of product innovation.
McDonald is about serving customers the foods they want conveniently, consistently, and at a low cost. "Burgers" are not of long term strategic significance within this formula and their share of the menu will continue to shrink.
Gourmet burger chains have nothing to do with the future of McDonald's or its competitive strengths. And If I am wrong, It would be wonderful. A product slip-up would be a great time to buy the stock for the long (10+ years) term.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Individualistic, conservative, hierarchical-thinking white males are the ones who created this (USA) country and pretty much everything of tangible, man-made value within it. Perhaps such characters are confident they can solve any technical climate problems as they occur without resorting to a panic or hysteria - Just as we put a man on the moon, developed satellite communications, the fundamentals of computer science, put a lunar rover on mars, etc.
And what is all this about "climate change" wasn't the problem "global warming" all of 5-10 years ago? And I believe before that it was the ice age. It is nice when every "change" in the climate can be used to prove your hypothesis - extremely useful from a political point of view.
The company spent a great deal of time replying, as can be seen in the above author provided link.
This article is in fact a textbook or classic smear job: It raises a bunch of questions and suggests something nefarious or underhanded is going on, while not offering a shred of documentation or proof. Clearly, the author has an axe to grind.
The Secret Of Warren Buffett's Alpha [View article]
I just noticed your use of the Average True Range indicator for the screen. I think this is a very useful indicator for trading, however I think there is an issue with the way it is used here and it might not be doing what you intend it to do.
The problem is that for the indicator to capture volatility accurately in this context, it needs to be relative to the stock's dollar price.
For example a 10 dollar stock with a .75 ATR is much more volatile in real terms than a 100 dollar stock with a .75 ATR. This is going to bias your list towards lower dollar priced stocks, not necessarily lower volatility stocks.
For example more than 50% of your stocks are under $20 and none are greater than about $56. If your reverse the sign on the ATR measure, all are over $20 and the highest price is almost $170.
For your purpose it would be nice if the finviz screen had something like "ATR/price" or "ATR/average price"
Finally saw a model S a few days ago. A beautiful car. In fact, my wife pointed it out and asked what it was, which is highly irregular. Would love to test drive one.
Herbalife Share Buybacks: A Fool's Errand? [View article]
Aside from the issues with this particular company (which i do not have an opinion on) I disagree with the way you are evaluating share buybacks.
You are suggesting that the the current market price determines if a share buyback is accretive or beneficial to shareholders. This is not the case. What maters is the internal rate of return on the money spent relative to other alternatives, as measured buy free cash flow and EPS per share. This is very easy to map out with a few numeric examples. Otherwise a nice article.
Attractively Valued Blue-Chip Dividend Champions For Your Retirement Portfolios [View article]
One interesting note is that both Carlisle and Dover emerged from the private equity firm GL Ohrstrom Co Inc, which was founded by the legendary George Ohrstrom in the 1920's and I believe is currently run by his grandson. I have noticed that some of the old school private equity firms have a good track record of bringing companies to market that end up being great long term investments.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
"So, when terms like denier and believer are invoked, one should suspect organized superstition (i.e. religion) is involved."
I agree. The best way to understand this debate is through the lens of Edward Bernays classic book (1928), "Propaganda". If you have not read the book, note that he is a defender and practitioner of Propaganda, not a critic. I highly recommend that anyone who has not read it to pick up a copy. You will have a much better understanding of what drives public "debate" in a democracy and why "acceptable" viewpoints are often so monolithic.
For a taste of the book, here is the first sentence:
"THE conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. "
The Paper World Of Brookfield Asset Management [View article]
Roddy, I understand that your style is "investigative" in nature, and that this might mean that you approach companies using a tactic that the the justice system might call a fishing expedition - "fishing" for issues or problems that might exist. Certainly, such an approach can make for entertaining reading.
And I do commend you on linking to the companies actual responses, which I relinked to above.
My biggest criticism with this article was the negative slant (created primarily by artful word choice) relative to your actual findings. Indeed, your most pertinent criticisms could almost without exception be equally applied to any large:
1. Asset management relationship or company 2. REIT/real estate investment 3. GP/LP relationship 4. Global conglomerate 5. holding company
You suggest that Brookfields heavy use of finance makes it vulnerable to a financial crisis, yet fail to credit the company for (relatively speaking) sailing through the 2008 debacle.
Amazingly, you manage to put a negative spin on aspects of the company that make it very valuable - specifically, the unique capital raising and investment platform they have created with their separate public securities.
You also manage to put a negative spin on the high level of insider ownership, which in my mind does align management's interest with shareholders.
With regards to the concentrated voting power, quite frankly I am all for it. It will ensure that the asset management structure stays in place and that management does not face distractions while executing on what I think is a brilliant strategy.
When the underlying strategy is as sound as it is with this company and the future path for growth is so clear, a CEO and top executives would have to literally be insane (sure, it is possible) to mess it up by being underhanded in their dealings.
I am not going to go into greater detail here. Instead, I hope to find the time to do a write-up on this company that gives it the credit that it fairly deserves.
My current estimate for BAM's share price is 140 -160 per share in about 10 years.
The Paper World Of Brookfield Asset Management [View article]
Unclelonghair, great comment. I would like to encourage you to write a feature article on this company - The perspective of a long term holder who is informed would be invaluable.
Brookfield Asset Management Has Some Explaining To Do To Second Wave Shareholders [View article]
You might want to reconsider your investment logic.
Private equity firms manage risk at the portfolio level, not the individual position level. It is completely logical for a private equity type of investor to forsake a small gain in effort to secure the possibility of a "home run" type of return - that is frequently how they operate.
As such, the investment or risk logic of such a fund is completely different from an individual who buys shares and wants a high probability of a successful outcome on a single, particular investment.
You can't "be on the same side" with another investor if you do not understand their objectives and circumstances.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Environmental policy can be sold to conservatives (myself being one) by focusing on the "tragedy of the commons" issue.
One of the problems with socialism is that there is often a lack of individual accountability or ownership. Some environmental issues suffer from this same problem. For example we all benefit from clean water and clean air, but who is accountable for ensuring that it stays clean?
If I was attempting to sell conservatives on an environmental policy, I would use this angle - I would not attempt to sell them on the non-falsifiable theory of climate change.
The Secret Of Warren Buffett's Alpha [View article]
The principle of accessing and using a stable, low cost source of financing and then investing stable, higher return assets is perhaps the most powerful wealth building formula that exists - The reason so many large fortunes have been made in real estate and private equity.
The Better Burger Threat To McDonald's [View article]
http://mcd.to/Uj2dmL
The real competitive advantages of McDonalds are its world class business systems, brand name, and strong record of product innovation.
McDonald is about serving customers the foods they want conveniently, consistently, and at a low cost. "Burgers" are not of long term strategic significance within this formula and their share of the menu will continue to shrink.
Gourmet burger chains have nothing to do with the future of McDonald's or its competitive strengths. And If I am wrong, It would be wonderful. A product slip-up would be a great time to buy the stock for the long (10+ years) term.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
And what is all this about "climate change" wasn't the problem "global warming" all of 5-10 years ago? And I believe before that it was the ice age. It is nice when every "change" in the climate can be used to prove your hypothesis - extremely useful from a political point of view.
The Paper World Of Brookfield Asset Management [View article]
http://bit.ly/16n5pED
The company spent a great deal of time replying, as can be seen in the above author provided link.
This article is in fact a textbook or classic smear job: It raises a bunch of questions and suggests something nefarious or underhanded is going on, while not offering a shred of documentation or proof. Clearly, the author has an axe to grind.
The Secret Of Warren Buffett's Alpha [View article]
The problem is that for the indicator to capture volatility accurately in this context, it needs to be relative to the stock's dollar price.
For example a 10 dollar stock with a .75 ATR is much more volatile in real terms than a 100 dollar stock with a .75 ATR. This is going to bias your list towards lower dollar priced stocks, not necessarily lower volatility stocks.
For example more than 50% of your stocks are under $20 and none are greater than about $56. If your reverse the sign on the ATR measure, all are over $20 and the highest price is almost $170.
For your purpose it would be nice if the finviz screen had something like "ATR/price" or "ATR/average price"
The Better Burger Threat To McDonald's [View article]
5 Reasons Tesla Motors Will Thrive [View article]
Herbalife Share Buybacks: A Fool's Errand? [View article]
You are suggesting that the the current market price determines if a share buyback is accretive or beneficial to shareholders. This is not the case. What maters is the internal rate of return on the money spent relative to other alternatives, as measured buy free cash flow and EPS per share. This is very easy to map out with a few numeric examples. Otherwise a nice article.
Attractively Valued Blue-Chip Dividend Champions For Your Retirement Portfolios [View article]
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
I agree. The best way to understand this debate is through the lens of Edward Bernays classic book (1928), "Propaganda". If you have not read the book, note that he is a defender and practitioner of Propaganda, not a critic. I highly recommend that anyone who has not read it to pick up a copy. You will have a much better understanding of what drives public "debate" in a democracy and why "acceptable" viewpoints are often so monolithic.
For a taste of the book, here is the first sentence:
"THE conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. "
The Paper World Of Brookfield Asset Management [View article]
And I do commend you on linking to the companies actual responses, which I relinked to above.
My biggest criticism with this article was the negative slant (created primarily by artful word choice) relative to your actual findings. Indeed, your most pertinent criticisms could almost without exception be equally applied to any large:
1. Asset management relationship or company
2. REIT/real estate investment
3. GP/LP relationship
4. Global conglomerate
5. holding company
You suggest that Brookfields heavy use of finance makes it vulnerable to a financial crisis, yet fail to credit the company for (relatively speaking) sailing through the 2008 debacle.
Amazingly, you manage to put a negative spin on aspects of the company that make it very valuable - specifically, the unique capital raising and investment platform they have created with their separate public securities.
You also manage to put a negative spin on the high level of insider ownership, which in my mind does align management's interest with shareholders.
With regards to the concentrated voting power, quite frankly I am all for it. It will ensure that the asset management structure stays in place and that management does not face distractions while executing on what I think is a brilliant strategy.
When the underlying strategy is as sound as it is with this company and the future path for growth is so clear, a CEO and top executives would have to literally be insane (sure, it is possible) to mess it up by being underhanded in their dealings.
I am not going to go into greater detail here. Instead, I hope to find the time to do a write-up on this company that gives it the credit that it fairly deserves.
My current estimate for BAM's share price is 140 -160 per share in about 10 years.
The Paper World Of Brookfield Asset Management [View article]
Brookfield Asset Management Has Some Explaining To Do To Second Wave Shareholders [View article]
Private equity firms manage risk at the portfolio level, not the individual position level. It is completely logical for a private equity type of investor to forsake a small gain in effort to secure the possibility of a "home run" type of return - that is frequently how they operate.
As such, the investment or risk logic of such a fund is completely different from an individual who buys shares and wants a high probability of a successful outcome on a single, particular investment.
You can't "be on the same side" with another investor if you do not understand their objectives and circumstances.
Google Now: Trading Your Privacy For The Future [View article]
I agree with that 100%. Would love to see a list of pay-based products and services that create viable alternatives.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
One of the problems with socialism is that there is often a lack of individual accountability or ownership. Some environmental issues suffer from this same problem. For example we all benefit from clean water and clean air, but who is accountable for ensuring that it stays clean?
If I was attempting to sell conservatives on an environmental policy, I would use this angle - I would not attempt to sell them on the non-falsifiable theory of climate change.