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  • Bitcoin Discussion Forum [View instapost]
    21 Inc releases Bitcoin computer, with the aim of facilitating machine-to-machine and programmatic Bitcoin transactions:
    Sep 23, 2015. 02:34 PM | Likes Like |Link to Comment
  • Charlie Munger On Misjudgment – Day 3  [View instapost]
    Charlie Munger is always awesome.

    Here's a fun paper: "Managerial Talent and Hedge Fund Performance:"
    Sep 21, 2015. 04:27 PM | Likes Like |Link to Comment
  • Bitcoin Discussion Forum [View instapost]
    The OTC fund GBTC appears to own Bitcoin. The company's website and an investment blog have covered this:

    Thus far it has generally traded at a significant premium to NAV. This poses the opportunity of being short the fund and long Bitcoin directly.*

    Also, accredited investors can buy directly at NAV, but then "shares are subject to significant resale and transfer restrictions."

    * I am not a lawyer not investment advisor, and make no recommendations regarding Bitcoin or Bitcoin funds.
    Sep 18, 2015. 08:29 PM | 1 Like Like |Link to Comment
  • Valuation Getting Hard To Ignore For United Insurance Holdings [View article]
    @man kind: OK, well thanks for your thoughts on that.
    Sep 18, 2015. 07:33 PM | Likes Like |Link to Comment
  • Valuation Getting Hard To Ignore For United Insurance Holdings [View article]
    @man kind:

    I certainly would not disagree that too fast of policy growth can be risky. But I'm going to make a counterargument to your position of the price target of $6 (and please don't take this personally: I simply would like to make the long case while understanding the short case).

    A price target of $6 would put UIHC at P/B of 0.6. That is relative to today's book --- if book continues to grow this ratio will be even lower. Such a ratio is below all comparable peer companies, even those that are unprofitable and have no growth. The minimum Wall St analyst price target for UIHC is $16. The mean of peer companies' P/B that I see on Google Finance is 1.78, which if applied to UIHC would imply a valuation of $17.6. That "value" is just a bit under Wall St analysts' mean price target of $18.7. These latter numbers seem reasonable to me if one agreed with management's current course.

    The way I would interpret a price target of $6 is that the analyst believes that by carrying on its current course, management will destroy significant value. One would assume (but correct me if I'm wrong) that you have disagreement with CEO John Fornay's statements on the recent earnings call that expense ratio will decrease in 12-18 months, with his long term target of 85% combined ratio, and with management's course generally.

    Of course, the long case is that management is pretty good, motivated to defend the share price, and increase per-share value, especially in light of the insider buying and ownership (see e.g. their recent investment presentation where they make the long case [1]). If management really thought they were going to destroy so much value, why not just stay in Florida, rather than working so hard to grow?

    So what I am trying to understand is: do you think UIHC management will destroy a lot of value, and if so, why? Or have I misinterpreted something?

    Sep 18, 2015. 01:25 PM | 1 Like Like |Link to Comment
  • Care Capital Properties Has All The Ingredients Of Something Special [View article]
    Hi Brad,

    Nice article on CCP. Also, good call on the spin-off gaining investment grade credit in record time. CCP just gained Baa3 credit rating from Moody's today [1]. Do you have any thoughts on this? Moody's mentions possibilities for upgrades/downgrades in the future -- do you have any thoughts about which is more likely?

    Sep 11, 2015. 07:10 PM | Likes Like |Link to Comment
  • 1,000 [View instapost]
    Congrats! Thanks for writing -- you're a writing machine. I can hardly even keep up with reading everything you write.
    Sep 11, 2015. 05:59 PM | 2 Likes Like |Link to Comment
  • Bitcoin Discussion Forum [View instapost]
    The Bitcoin transaction volume has doubled since Sept 2014 and the price has halved.

    As usual recent Bitcoin news has a very high drama factor:

    (1) There is a big political split between the miners and exchanges about block size changes, with different core developers joining one or the other faction. The two groups have different incentives -- miners want Bitcoin to stay stable like some digital gold, whereas exchanges want it to grow like crazy:
    One company is even stressing the network by flooding it with tiny amounts of free money to prove that the block size needs to increase:

    (2) As usual there are more Bitcoin startups funded by VCs, including an interesting proposal by Chain Inc to use blockchain technology inside Wall St banks for faster settlement:
    This is explored in more depth on an article on Wired, where NASDAQ's CTO is quoted as saying blockchain technology can transform the stock market:

    (3) A few months ago there was much talk about Sidechains, which allow many different decentralized Bitcoin-like networks to all be glued together by having exchanges that peg the value to some fixed quantity of Bitcoin (the article discusses how this could be used for e.g. assets like stocks):

    (4) Former Mt Gox CEO arrested and charged with embezzlement:

    (5) Agora marketplace, a "darknet" for exchanges of goods similar to Silk Road, went offline last month because of anonymity vulnerabilities in the Tor anonymity network:

    (6) And of course we have the usual cybercrime, FBI arresting criminals, and in a unusual twist, a secret service agent admitted to stealing Bitcoin: "In court on Monday Bridges admitted his theft had made Ulbricht [the former Silk Road founder, who is now sentenced to life in prison] believe that another individual was stealing from Silk Road and helped lead Ulbricht to try to hire someone to kill that person."
    Sep 11, 2015. 01:40 PM | Likes Like |Link to Comment
  • The #1 Stock In The World [View article]
    I was going to add some more comments about statistics of volatility, but as a result of these comments by jacobtr and Chris I thought better of it ;-).
    Sep 3, 2015. 11:48 AM | 1 Like Like |Link to Comment
  • The #1 Stock In The World [View article]
    Interestingly, if one does portfolio optimization (always a dangerous tool, but still) to find out which mix of (backfilled) XIV or SPY gives the best backtested Sharpe ratio over the dates 3/26/2004 to 9/1/2015 the answer is: 100% XIV, 0% SPY (due to, apparently, the higher Sharpe ratio for XIV and the high correlation with SPY). Of course, in a real portfolio one would want to rebalance with cash or cash-like holdings otherwise the drawdowns would be insane.
    Sep 2, 2015. 04:42 PM | Likes Like |Link to Comment
  • The #1 Stock In The World [View article]
    Actually I meant to say 'more comprehensive numbers'. To get maximally representative numbers it would probably be necessary to control so that the start and end dates have similar VIX/contango.
    Sep 2, 2015. 03:21 PM | 1 Like Like |Link to Comment
  • The #1 Stock In The World [View article]
    Some more representative numbers for XIV are below.

    If one uses the daily backfill data since 2004 [1], XIV has gone up by 10.9x since March 26, 2004 (when VIX future trading was initiated) to Sept 2, 2015, with the worst drawdown of 93% in the 2007 to 2008 period. The S&P during that period gained 2.17x with a maximum drawdown of 55%. The annualized Sharpe ratio for S&P 500 during this period is 0.53 (including dividends), whereas for the backfilled data XIV has a Sharpe ratio of 0.83. (In both Sharpe calculations I assumed the RFR was zero, since the RFR has been pretty low during that period).

    The daily correlation of XIV with SPY appears to be about 0.94, from its initiation in 2010 to the current date. Volatility is mean reverting and the current date has volatility above the historical mean of 19.5 during the 2004 to 2015 observation window. So the current time may not be a representative observation time.

    XIV appears to have gone up in general during this time because contango is the usual situation for VIX futures.

    Sep 2, 2015. 03:15 PM | 1 Like Like |Link to Comment
  • Why Shorting Volatility Now May Be A Very Favorable Trade [View article]
    @djgabel: It really depends on the investment time frame. Obviously for short-term trading the backwardation is super dangerous. Everyone agrees on that, and it was mentioned in the original article.

    But Martin mentions that this is a long-term trade/investment. Usually for long-term stock market investing one prefers holding periods of at least a couple years. In that case, Martin's strategy has a 100% win rate.

    Would someone have closed the position due to psychological reasons in 2008? I suppose it depends on the person. But even if so, that is not a flaw in the strategy. It is a flaw in the person who makes the trade.
    Aug 30, 2015. 12:42 PM | 2 Likes Like |Link to Comment
  • King Doesn't Need A Homerun To Keep Its Throne [View article]
    I think you mean Paradise Bay? Pirate Bay is a website for "pirating" movies and other content, which is illicit in many legal jurisdictions.
    Aug 10, 2015. 09:55 AM | Likes Like |Link to Comment
  • Code Rebel: 90%+ Downside - High Risk/No Reward [View article]
    One might also wish to read up on CherryOS, which CEO Arben Kryeziu was previously associated with:
    Aug 8, 2015. 11:58 PM | 1 Like Like |Link to Comment