sgt.red.blue.red's Comments

Berkshire Hathaway on Sale - Financial Times

Tue, 08 Dec 2009 20:09:50 -0500

I have owned A and B shares since the early to mid 1990's. With respect to dividend policy, the frictional cost of double taxation of dividends is avoided by not paying them. This is one reason he split the A shares in the latter Nineties was to enable investors to sell portions of their holdings for 'income'. Commissions now being a pittance, this is viable 'dividend policy'.

As for 'old line' companies, industries, &c., the NASDAQ is a proxy for the opposite. Chart Berkshire v. NASDAQ, S&P, etc. and see for yourself. Berkshire has outperformend the NASDAQ, S&P since the early Nineties. I have (attempted) done this for you here:

(finance.yahoo.com/echa...;range=my;compare=wfc+...

The NASDAQ dividend can't explain all of the discrepency between its lag of BRKA.
_______
Disclosure: Long A and B, VEU, VTI, VWO, O, VXF, GSG, VNQ, PCY, PFF, HYG.

Even Buffett Makes Mistakes

Tue, 08 Dec 2009 19:41:40 -0500

Even though Warren Buffett observed that the world airline industry has not made a dime for investors in a century of manned flight, escaping with a profit after lamenting he shouldn't have invested in US Air, it seems that NetJets is just another form of the airline animal. Whether the revenue mile is generated via an "owned" or rented "seat", its the 'cost of capital' that never really gets covered.

That said, I added to my position in BRKB (3305) this morning. Warren gets the 'big picture' pretty will. The recent BNI acquisition has more of a moat around its business than do the air carriers. Disclosure: Long A and B shares.

Royal Dutch Shell Sheds Downstream Image

Tue, 01 Dec 2009 16:51:54 -0500

Kurt Wulff, what is the discount rate used in your analysis?

Buffett's Burlington Buy Is Really a Bet on China

Fri, 20 Nov 2009 15:15:00 -0500

Thanks, Texas_Technoman

On Nov 06 10:30 AM Texas_Technoman wrote:

>
> BNI is a much stronger player in the intermodal (trailer/container
> on flat car) sector than UNP. In fact, up until the current slowdown,
> BNI's intermodal traffic has grown more than all the other North
> American RR's combined. UNP is stronger in the Industrial Products
> sector (o/t coal), which feeds an industrial base in the US....that
> is shrinking. The future is in containerized freight (both import/export)
> and domestic...rails do the long haul, motor carriers the pick up
> and delivery....it's all about Intermodal!

Buffett's Burlington Buy Is Really a Bet on China

Fri, 06 Nov 2009 10:08:21 -0500

Why BNI as opposed to UNP?

TLT Options: Taking Advantage of Interest Rates

Mon, 02 Nov 2009 19:14:17 -0500

Thanks, ST. Will review.

On Nov 02 09:14 AM Surly Trader wrote:

> static.seekingalpha.co...">
>
>
> Futures are generally the most efficient way to hedge. When you buy
> or sell a leverage ETF they are often using futures as part of their
> investment program. You do not have a perfect hedging vehicle for
> your situation available. Two year treasury futures would be the
> closest match to your 1 year UST exposure (TUZ9). Euro$ futures are
> probably your best way to hedge your prime (typically fed funds +3%).
> Basically you need to figure out how much the value of your loans
> increase against you for every basis point increase in rates, then
> short the appropriate number of Euro$ and two year futures. The problem
> is that you end up with a liquidity issue because the futures are
> mark to market and your loan is not. Plus you technically need to
> hedge each cash flow in the future, so you should be using a string
> of Euro$ futures, but that's probably not practical for you.
>
> On the flip side, if your loans are very small then it might make
> more sense to use ETF's such as the barclays short treasury (SHV)
> or 1-3YR treasury bond (SHY)

TLT Options: Taking Advantage of Interest Rates

Sun, 01 Nov 2009 21:47:48 -0500

I’ve got a couple of commercial real estate loans. Both are adjustable interest rate loans. I elected to go with adjustable rate loans for several reasons; 1) where we were in the interest rate/business cycle when I put the loans in place, 2) in that the spreads over the underlying indices, in the case of the Treasury adjusted loans, were the same spread no matter the maturity of the underlying index ), and, as such, 3) most of the time during the interest rate cycle there is a positive yield curve, not a negative one, tipped the scales in favor of the adjustable.

I have 2 loans;

The first loan adjusts annually with one year U.S Treasury (adjusted for constant maturity) index. Index available on H.15, in IBD or WSJ (Tuesday). 1 year UST + 2.625%. So every year, this adjusts.

The second loan adjusts with prime (prime + zero) as change in prime changes (instantaneous).

I would like to know BEST way to hedge against rate increases, $ for $, for each of these loans (short side ETF’s, options, LEAP’s, futures. etc.). In that they are not large loans, the scalability of the hedge (frictional cost) must be considered.

I don’t have any real fear on these things jumping, as I am in the money on both loans now. However, if I can find the optimal “hedging” instrument (e.g. a 3x short ETF), it would be money in the bank.

Ackman Explains Pairs Play: Corrections Corp and Realty Income

Sun, 01 Nov 2009 21:10:42 -0500

What does it mean that CXW doesn't have a strong technical correlation to other stocks when it has a .79 correlation to O, a stock he shorted
see: www.invescopowershares... ...plug in o and cxw
disclosure: long O. looked at CXW a few years ago, passed. No yield. Stock price has not tracked O for ten years, even after not distributing any dividends.

jmann83 said 'very interesting stock, doesn't have a strong fundamental or technical correlation to many other stocks, which is usually a trait of an outperformer,'

Credit Policies Still Threaten Recovery

Fri, 09 Oct 2009 20:06:18 -0400

CAP, Dec. 17 was about three months out from the date of the Graham Summers article.

On Sep 19 12:01 AM CAPITALIZER wrote:

> Why Dec. 17 though?

Credit Policies Still Threaten Recovery

Fri, 18 Sep 2009 20:47:43 -0400

I will be checking back on or around Dec 17 2009 to check on your forecast. I am 77 percent in equities, 17 percent in cash. I will not be selling.

James O'Shaughnessy: Market Returning to Rationality

Fri, 18 Sep 2009 19:40:34 -0400

Buffett has said the same...over the next 10 years, it will be equities not government debt.

Portfolio Management - Wise to Keep Some Cash

Sun, 23 Aug 2009 17:45:13 -0400

Warren has had 20 to 40 billion in cash over the recent past several years.

Abby Joseph Cohen's Bullish Calls

Fri, 07 Aug 2009 16:55:15 -0400

Abby was predicting SP move to 1675 one year out from when it was 1463. Go and see when the SP was at 1463 and plot out one year, then check her predictive ability.

15 Stocks You May Want to Keep Out of Your Portfolio

Fri, 10 Jul 2009 17:02:21 -0400

You asked the question I was going to ask. Good thing I read through all the Comments first. These blogsters have not responded very often (that I can see) to counterpoints raised, which may indicate a lack of confidence in their arqument, or insufficient analysis in the first place.

On Jul 10 01:44 PM ERCaptain wrote:

> I have one question --
> How often have companies that have received the "<1.8 – Likely to
> Go Bankrupt in the Next 2 Years" rating actually gone bankrupt within
> 2 years?
> Give us some historical data!

Lessons on a Busted Move in Bonds

Tue, 02 Jun 2009 20:59:58 -0400

If you're looking for a short term trade on TLT, it might be coming soon. But the real time to buy TLT is when the stock market is peaking, like, say June, 2007, when, nobody in his right mind would (sic) would want to be sacrificing 'upside' for something like 5.25+ % yield.

PIMCO's Bill Gross Sees a Bleak Future

Mon, 01 Jun 2009 21:26:12 -0400

I think in June early July 2007 on CNBC Bill said we are bear market bond managers now (I believe he was referring to the long down trend of Treasuries) and lo, a few months later, bond prices rallied. So he was bearish, but wrong then.

On May 31 01:41 PM Michael Young wrote:

> Excellent thread. I always wonder if Bill Gross is a little more
> pessimistic than he could/should be. Has he ever been bearish on
> bonds?

Not So Easy to Follow Buffett's Picks

Thu, 07 May 2009 21:02:30 -0400

This is true. Some deals you can't buy as "good" as Warren. But both GE and GS he got 11 percent to wait and options to convert to common at prices much higher than both commons fell to just a couple of months later. You could have put your dollars very advantageously in Nov thru Jan. Buffett at the time said he doesn't try to time the market on purchases, but when good franchises come available at good prices he buys.

In any event, if you think he gets better deals than can you, you can buy his expertise by buying brka or brkb.

Disclosure: Long BRKA BRKB

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Wed, 22 Apr 2009 15:01:31 -0400

In the author's opinion, what are the 'top quality' r.e.i.t.'s? We get the rundown on the 'marginal quality' one, WRI, KIM, PLD, DRE? I would be interested in his take.

Personally, I own O and VNQ.

Most Likely Scenario for the U.S.: Decade-Long Recession

Thu, 16 Apr 2009 17:42:43 -0400

So, what is the author Martin Hutchinson buying with his money? Or what is he selling now? How about your idea of what to invest in going forward.

sgt.red.blue.red

Russian Oil Exports: Dropping, But Why?

Thu, 21 Aug 2008 14:52:35 -0400

Jason, This is exactly why the Russians ran off Dudley of BP TNK, because he wanted to reinvest to expand production, reducing current yield the Russians wanted to skim.

...Prior to the partial TNK acquisition by BP, TNK had aggressively seized several assets from another BP joint venture, wrote The Economist in May 2007, ...

sgt.red.blue.red

Bond ETFs: Are Treasury Bonds Entering a Downtrend?

Wed, 04 Jun 2008 19:20:27 -0400

I did the PCy Emerging Markets Sovereign debt, HYG U.S. Corprate High Yield and PFF Preferred fund in roughly equal position in April. Average blended yield is 6-7 percent. The PFF and HYG move with the stock market. PCy moves in its own orbit, while dollar hedged, it moves against the dollar.