Sandeep Gill

Dry Bulk Shipping Valuations Approach “Bubble” Proportions

10% stop loss did get triggered a while ago. Yes, there were losses. Markets can indeed stay irrational for a long time. Am short DRYS now @97. Have increased stop loss band to 15%. If I get stopped out again, I will actually be thrilled because it would mean a great opportunity to buy 2010 put options. Even the heavy premiums would be worth it.

Dry Bulk Shipping Valuations Approach “Bubble” Proportions

It's funny but I get a lot of responses from people saying that the industry is in good shape until 2009 or 2010, after which supply demand economics will catch up. That is like playing the "greater fool" theory hoping to sell eventually to someone else willing to pay a higher price for what is essentially a zero EVA business in the long run.

1. At current valuations dont you believe that is priced in? At current rates, it becomes economical to delay scrapping and drydocking which will release supply far quicker than your 2010 projections. Not to mention the conversions (see article)

2.Agreed but consider that India's tax policy on iron ore exports could be reversed, it is not iron clad (no pun intended).

3, 4, and 5. Not much to agree or disagree on there.

6. Yes DRYS and GNK have different charter exposures but prices of both WILL follow the BDI. If you study the dry bulk history from 1970's onwards you will see that there have been numerous periods when freight rates have collapsed and contracts have been reneged on. What else can companies on the fringe of bankruptcy do?

Dry Bulk Shipping Valuations Approach “Bubble” Proportions

I don't believe there is a way to short the BDI but there are some hedge funds which trade in forward-freight agreements (FFAs). Also, no ETF exists for dry bulk shipping just yet.
I believe there is demand for such a product, but strangely no one has stepped up to offer it.

Berkshire Hathaway's Valuation: Credit Suisse or Common Sense?

Mr FIG trader,

Perhaps screening postings made under the cloak of anonymity, would lead to better dialogue.

I would urge you to read the annual reports where all the information is clearly stated. Here is a link to the 2006 annual report: www.berkshirehathaway....
The per share investments exclude those that are backed up by debt in their finance operations.Also, Berkshire generates zero cost float through exercising underwriting discipline.
My article stated that this was an imaginary scenario of liquidating/selling everything. Selling Bekshire's insurance operations to other financially strong insurance companies would hardly violate any state regulations, else one would never see any insurance industry acquisitions/mergers.

This is not a stock that can be played for quick gains but over a long time period it should do better than the market. Hope this helps.

Sandeep

Berkshire Hathaway's Valuation: Credit Suisse or Common Sense?

Good question Grant. I should probably have clarified this in the article itself.
The answer is yes. Specifically, in per share investments have excluded those investments that our held
in their finance operation because these are largely offset by borrowings.
See methodology in page 3 of 2005 annual report at berkshirehathaway.com/...

Berkshire Hathaway's Valuation: Credit Suisse or Common Sense?

Thank you Tim. I stand corrected. One workaround may possibly be for the corporation to distribute the shares it holds in other corporates amongst its own shareholders who may then be liable for the individual long term capital gains tax rate. A good tax lawyer would probably know more about this.

BTW -- You run Cedar Creek Partners right?