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Chris DeMuth Jr.
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Chris DeMuth Jr. is the founder of Rangeley Capital LLC. Rangeley is an investment firm that focuses on event driven, value-oriented investment opportunities. Rangeley Capital and his value investing forum, Sifting the World (StW), search the world for misplaced bets. Rangeley exploits them for... More
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  • Just A Few ?s For… Whopper Investments 11 comments
    Nov 2, 2013 1:55 PM | about stocks: BRK.A, BRK.B

    Whopper Investments,

    We're looking for tips on adding to our research toolkit. What do you have for us?

    Given how the world hinges on the latest filings by Icahn, Buffett, Ackman, etc., I'm frequently shocked by how few investors seem to pay attention to 13-Ds filled on microcaps. It's not uncommon to see an investor owning 20-30% of shares in a company specifically laying out the investment thesis for a stock, then discussing how he'd realize value if he controlled the board, and proposing to take control of the board. Yet the market (and investors) seem to completely ignore these filings in company's under $250m in market cap, but the same types of filings by investors w/ a smaller ownership stake drive companies w/ market caps >$2B up 15% in a day.

    How would that affect research technique? I (as I'm sure you do) take a quick peak at every 13-D filed every week. Most of them are ideas I'm not comfortable w/ or don't agree w/, but it's a quick check and it easily pays for itself when a really interesting 13-D passes through. It also helps a lot in knowledge accumulation- knowing the investor X argues company Y should trade at a certain multiple because competitors A, B, and C do reveals a lot, and there can be really interesting industry knowledge in them.

    A lot of people are wondering what your screen name means. Could you tell us?

    My screen name is honestly meaningless - it popped in my head when I was first starting out as a blogger, and I've kept it because I feel like it's built up some "brand equity". I actually tried to change it a few times, but could never get a change pushed through the SA system.

    What is on SA that you never ever want to hear another word about?

    There are so many topics I'd love to ban that it's difficult to narrow it down to one. I'm sure technical analysis will be the most popular choice, so I'll avoid that. In terms of articles I always avoid, I'd love it if SA eliminated any article on companies >$20B in market cap. It's pretty unlikely any article on a $20B+ company on seeking alpha is going to have a true "alpha" idea behind it given how many analysts are likely already following the company.

    Fourth and finally, if you could hear more from one other investor on SA, who would it be? (I'm asking the questions here, so am ineligible as an answer).

    You rightly guessed that you'd be the author I'd love to hear more from on SA. Specifically alpha rich arbitrage articles if you're up for it. Outside of that prayer, I've found Mike Winston's articles to be very thorough, though I (unfortunately) have yet to invest in them. And, despite the hyperbolic titles, I find Harry Long's ideas excellent.

    Thanks! As it turns out, Winston is a friend; I hope and expect that we'll be hearing from him on this blog in the days to come.

    Stocks: BRK.A, BRK.B
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Comments (11)
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  • Monolith Investments
    , contributor
    Comments (140) | Send Message
    Are there any websites / resources available to track 13-d filings ?
    2 Nov 2013, 08:14 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11143) | Send Message
    Author’s reply » I subscribe to and recommend 13D Monitor (, a comprehensive research service specializing in shareholder activism and 13D filings. I also subscribe to and recommend Edgar Pro ( and have an alert set up for a number of filings including 13Ds. I file 13Ds from time to time, including one on OSHC. But none of this is necessary -- one could simply follow 13Ds with a combination of a free SEC site and Google Alerts.
    2 Nov 2013, 09:50 PM Reply Like
  • Monolith Investments
    , contributor
    Comments (140) | Send Message
    Thank you, Chris.
    2 Nov 2013, 10:37 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11143) | Send Message
    Author’s reply » You're welcome. One last source is activist funds often set up websites specific to their 13D efforts with presentations, letters, and their 13Ds and 13D/As. I will typically post those on StockTalks or here on my blog.
    3 Nov 2013, 06:47 AM Reply Like
  • connellybarnes
    , contributor
    Comments (552) | Send Message
    Nice! I should track those 13-Ds... I'd disagree that analysis of companies above $20B won't have's just more rare. For example we saw AAPL priced down to $385 this year, and HP was priced down to $11. It's uncommon that large companies offer a good investment but when they do they can offer some additional safety because of the scale, brand, and diversity of the company's operations.
    3 Nov 2013, 12:28 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11143) | Send Message
    Author’s reply » It can happen and those are two fine examples. I'm curious about the phenomenon of great investments hidden in plain sight. Why was BRK.A not priced right a few decades ago? I think what can happen with companies such as these is that they are too big for the market to correct quickly. With arb spreads, for example, typical funds have maximum position sizes and in aggregate those sizes add up to a certain amount of money and deals larger than that (I start to notice with deal targets over $10 billion in market cap) can have wider spreads.
    3 Nov 2013, 06:45 AM Reply Like
  • connellybarnes
    , contributor
    Comments (552) | Send Message
    With BRK.A if the market had priced the equity at today's price in mid 1980s then Buffett could stop working and immediately reap the results of future compounding of book value by selling his equity, then use the proceeds to compound in a new company :-).


    That's interesting about the merger arb fund sizing problem. If I ever do a merger arb I'll have to look at large deals...


    I kept buying AAPL and HP until they hit the bottom price and remember the analysts and other financial commentators became ridiculously negative about those companies' prospects as their prices hit minimum. I would guess they are doing some Keynesian beauty contest of predicting the next earnings, or what the market will next do. Probably the big value firms only account for so much volume, and most volume is driven by speculators of different Keynesian "levels" (e.g. HFT tries to predict the next second, earnings speculators try to predict the next quarter, ...) so the price gets taken down below where it should be. My guess is that these speculators are getting negative returns (in aggregate) because they are trying to supply vastly more liquidity than the market actually demands.
    3 Nov 2013, 01:40 PM Reply Like
  • tuliptown
    , contributor
    Comments (1561) | Send Message
    chris, my favorite part of your interviews (2 now) is the suggested authors. In both of your reviews I was already following the author you talked to, but not the authors they recommended. Now I am.


    Thanks, also, for detailing how 13-D's can be looked up.
    3 Nov 2013, 08:14 AM Reply Like
  • SA Eli Hoffmann
    , contributor
    Comments (1018) | Send Message
    I love this approach. But there are dozens of 13-D and 13-G filings on an average day. How do you drill down to find the interesting ones (such as the one you posted today: Are there certain things you're looking for?
    3 Nov 2013, 12:59 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11143) | Send Message
    Author’s reply » Good question. There are a few factors important to me. There are certain activists, such as Starboard, that I follow particularly closely because of their value focus and successful track record. Also, we tend to favor activism that is pushing targets towards selling their company. The academic literature indicates that activism works, but it works best when pushing for sales. It is a crude tool and can ill fit subtler strategies.
    3 Nov 2013, 02:17 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11143) | Send Message
    Author’s reply » Whopper Investments +31.2% average return of the 174 recommendations in the two years following each stock rating. 74 out of 174 recommendations had positive returns in the two years following each stock rating according to
    5 Feb 2015, 07:57 PM Reply Like
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