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Wealthcompound

 
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  • The Truth About Warren Buffett And 'Forever Investing' [View article]
    That is not because he has a buy and hold mentality, it is because he has an investing mentality. Buy and hold is a simplistic description of investing like "set it and forget it." Of course he doesn't sell just because earnings fell 10%. Would you sell a great piece of real estate just because you have a vacancy and have less cash flow as a result? Would you sell a pizzeria just because this month wasn't as good as the previous month? As far as not selling when the stock doubles, that is true. Only a fool would sell just because something doubled. However, he has stated that he made a mistake and should have sold some of the larger positions back in the late '90's. That doesn't mean that those companies don't have a "durable, competitive advantage"; it just means that he should have sold when the market valuation far exceeded the business value.
    Dec 26 09:35 AM | 2 Likes Like |Link to Comment
  • The Truth About Warren Buffett And 'Forever Investing' [View article]
    Wrong again! After he finished Columbia, he returned home and worked for his father until Ben Graham asked him to come and work for him in New York. Then he returned to Nebraska and started the partnership.
    Dec 26 09:19 AM | Likes Like |Link to Comment
  • The Truth About Warren Buffett And 'Forever Investing' [View article]
    I am not quite sure about the purpose of this post especially considering there are some glaring errors such as Buffett graduating from the University of Nebraska and starting a partnership, which is just wrong. If you are going to add biographical information, please make sure it is accurate. More importantly though is the fact that the author of article discusses Warren Buffett and investing without knowing much about Warren Buffett or investing. So, to avoid boring people to death, I will keep it short. Buffett is not a "buy and hold" investor. He is an investor, pure and simple. "Buy and hold" was a catchy phrase coined by the financial services industry back in the '80's in order to make the investing process look simple and attract money from the individual investor, many of whom were still hesitant about investing in equities via the stock market. For proof that Buffett is not a "buy and hold" investor, look at Freddie Mac, which Berkshire had a stake in for many years and was a phenomenal business for a very long time. However, by (I believe) 2001, Berkshire no longer held any shares. Why? Because he acted like the investor, and by extension business owner, that he is and sold the stake that Berkshire held. He did this in response to Freddie Mac purchasing securities other than MBS that they were in the business of dealing with (if I remember correctly, RJR Nabisco bonds but don't hold me to that). Had Buffett been a "buy and hold" sucker, he would have bought Freddie Mac shares, held them till now, and have a ton of explaining to do to Berkshire shareholders.

    I could go on but I am tired from a busy Christmas day. If you really want to read about Buffett, I suggest reading the Berkshire Hathaway letters as well as the earlier Buffett partnership letters. Why not learn about Buffett than from the man himself?
    Dec 26 12:51 AM | 1 Like Like |Link to Comment
  • Dividends Vs. Buybacks: Putting The Debate To Bed [View article]
    Actually, I think I did bring something to the debate because you still haven't been able respond to my original gripe that buybacks and dollar cost averaging are very different. Instead, you complain that my diatribe was hard to understand, which is just a way to avoid a constructive conversation that might benefit other readers of this post. Your reasons for doing this may vary but I sense that it is because you are unable to support your argument.

    As far as the original post, maybe I shouldn't have been so snarky. My apologies for that. However, a glaring error such as that needed to be pointed out and I was hoping to elicit a more substantive response.

    Happy Hanukkah.
    Dec 18 12:57 PM | 1 Like Like |Link to Comment
  • Dividends Vs. Buybacks: Putting The Debate To Bed [View article]
    You are welcome. However, maybe you shouldn't have gotten bored at "I stopped reading." Since you are an RIA, I am sure you are able to see the difference between dollar cost averaging and share buybacks. At least I hope you can (especially for your client's sake).

    Have a good weekend as well.
    Dec 17 03:48 AM | 3 Likes Like |Link to Comment
  • Buy Shares Of Rogers Communications And Own Its Undervalued Sports And Media Segment [View article]
    I have to agree with laidbackluke and most of his points, which if true, seem to make sense (I have not looked at RCI in depth, so I don't know). What I take issue with is that the post mentioned several times that RCI was undervalued yet offered no real analysis as to why. You offer some details about their holdings with regards to sports teams (Forbes usually overestimates values of sports teams especially NBA and NHL) and arena properties, that they beat analyst estimates and that some mutual funds own shares. So what makes them undervalued? I appreciate that you are looking for shares that can be purchased by sports fans so they can own a team but the article should end there unless you are willing to provide some analysis as to why the shares are undervalued.
    Dec 16 06:01 PM | Likes Like |Link to Comment
  • Dividends Vs. Buybacks: Putting The Debate To Bed [View article]
    I stopped reading this article after this paragraph

    "In the long term, stock buybacks are no different than dollar cost averaging for investors. If the company paid a dividend every three months that is automatically re-invested by shareholders, chances are, some of those re-investments will be at unfavorable long term prices. That is the nature of automatic investing. The case for stock buybacks being badly timed is a case against dollar cost averaging."

    Every sentence in this paragraph bothers me. First, the fact that stock buybacks are no different than dollar cost averaging or reinvesting dividends is ridiculous. I could care less what a fellow shareholder does with their profits. If they choose to reinvest at unfavorable prices, so be it. However, I care very much if management decides to use shareholders money to buyback even one share of stock at an unfavorable price. I can do that myself if I wanted to. Buybacks can be a good way to enhance shareholder returns but only when done properly which means purchasing undervalued shares and retiring them. This is rarely the case though.

    And don't even get me started on "automatic" investing, dollar cost averaging and the related fallacy of buy and hold.
    Dec 16 05:37 PM | 4 Likes Like |Link to Comment
  • Alico: Getting Land On The Cheap [View article]
    There is no need to look at EV when you examine the components of a business separately and determine sustainable debt levels. Also, EV is flawed in many ways. First, it takes the value of debt at market values instead of book values (debt holders have par claims, nothing more). Second, there is no accounting for valuable assets that are "hidden" on the balance sheet. Third, it is more useful in comparing companies with differing capital structures in the same industry as part of a ratio (EV/Cash Flow for example). Finally, since EV uses market cap for the equation, what if the market cap is wrong? However, ALCO has an EV of approximately $200 million, which is still much less than the land alone is worth, which begs the question, do you really think that you could purchase ALCO as a whole for $200 million dollars? If you use EV/acres, that is approximately $1,500 per acre. The board would laugh in your face. In addition, the value has to be realized? If you buy an apartment building for 50% of its value, you must then sell it so you can "realize" the value? That is a ludicrous notion, especially when it produces a return. The value is what you get when you purchase the asset.
    Dec 15 03:07 PM | Likes Like |Link to Comment
  • Alico: Getting Land On The Cheap [View article]
    I doubt any CEO is as interested in my welfare (or yours) as he is his own. So why invest in any public company if that is the case?
    Dec 15 01:36 PM | Likes Like |Link to Comment
  • Regulator Issues Investor Alert On Retirement Portfolios [View article]
    If you have been working at PG for a decent amount of years and hold a large % of your 401 (k) in company stock, I doubt that a 38 % drop in the market value of the shares is cause for concern. In addition, the mistake that individuals make in allocating a large % of their 401 (k) to company stock is that they feel they have knowledge of the company simply because they are an employee. Very few people at Enron could tell you what they actually did. Holding a significant % of company stock is not necessarily a bad thing. However, it is vital to objectively analyze such an investment as would be done with any other potential financial asset.
    Dec 10 02:19 AM | Likes Like |Link to Comment
  • 4 Well Run Banks To Buy Now, 1 To Avoid [View article]
    Why would you want to avoid a well-run bank until the light at the end of the tunnel is visible (which is basically what the author is stating he wants to see with HCBK)? At that point it is usually too late to acquire the business at a bargain price. I am a bit bias though as I did a write up on HCBK here http://seekingalpha.co....
    Dec 9 05:51 PM | Likes Like |Link to Comment
  • Why Walmart And Target Are Worth Around $70 Apiece [View article]
    The real value and growth with Wal-Mart is overseas. The U.S. operations will not grow much (especially if their attempts to enter urban markets like NYC are continually stifled) but will continue to generate tons of cash.
    Dec 8 03:27 AM | Likes Like |Link to Comment
  • Lexmark Makes For An Attractive Acquisition On Fundamental Value [View article]
    I happened upon your comments regarding margin of safety on http://seekingalpha.co... and after a quick run through of your analysis of Lexmark must take issue with your analysis of their cash and "safety". You mention $1.3 billion in cash as if they have no debt when in fact they have $649 million of long term as well as $1.1 billion accounts payable. The rest of your analysis consists of estimations which can't be considered in "margin of safety" because they are exactly that, estimations. So where is the margin of safety? Examining working capital also doesn't produce a margin. Now I have no knowledge of Lexmark or their business besides a very quick check of their balance sheet, so your valuations may be spot on but as far as a true margin of safety, I don't see it.
    Dec 8 03:22 AM | Likes Like |Link to Comment
  • Volcker Says U.S. Mired In Recession And Inflation Is Coming [View article]
    I have great respect for Mr. Volcker but how could he make connections between what is going on in the E.U. and the U.S.? Two very different situations. The U.S. has been mired in a recession caused by reckless speculation (with many different parties at fault) while the E.U. has had a recession partly caused by and fully exasperated by overly indebted countries and the inflexibility of a monetary union with members that differed drastically in their economic policies.
    Dec 8 02:41 AM | 2 Likes Like |Link to Comment
  • Hudson City Bancorp: Concerns Are Overblown [View article]
    Actually, the Northeast has the lowest unemployment of any region in the country. As of October 2011, it was 8.1 % (I believe that is the most recent stat from the Bureau of Labor Statistics). The financial industry lost jobs but not as many as one would think given the magnitude of what happened in the industry. However, I have seen several reports about financial industry lay-offs to take place this year or next in the neighborhood of 200,000 or so. We will see. If that number is accurate, HCBK will probably see some effects given that many financial services professionals reside in their markets, especially New Jersey.
    Dec 3 02:15 PM | Likes Like |Link to Comment
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