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connellybarnes

connellybarnes
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  • Why Write On Seeking Alpha? [View article]
    You're right Wilson that some really good investors have their own blogs.

    A wish list feature that I would like is for syndication from independent blogs to one's SeekingAlpha InstaBlog being fully automatic. Of course this could also increase spam, so therein lies a filtering / machine learning challenge. Currently I see some authors occasionally do this manually, but the coverage is spotty, since they may not always have the time to manually copy over blog posts.

    Some people use RSS to track lots of different blogs manually but I prefer to just go to one website such as SeekingAlpha to find everything I'm looking for.
    Jan 23, 2015. 02:51 PM | 1 Like Like |Link to Comment
  • 2015 Value Investing Event Calendar [View instapost]
    I once paid $50 to go to an investment conference at UVa Darden and then realized I overpaid.

    The best of the mediocre speakers was Richard Chilton. He explained why he was not long Apple on hand-wavey general arguments about "disruptive technology" when I was long Apple specifically due to my projections of iPhone sales, Icahn being an activist, and it being a rare great opportunity in large companies with a (then) giant cash hoard (I think it was trading around 9 P/E at the time, before subtracting cash). One of his employees said his fund returns were great since inception and I calculated it would have been about the same to just buy Vanguard Small Cap Value Index.

    Everyone else at the conference jabbered about macro noise.

    Except one clever guy I chatted up who was telling me about how he had scrapped some aircraft for a great IRR. That was fascinating. You buy them from fiscally desperate airlines and then sell off all the parts. But I haven't figured out how to do that yet, so investing conferences are still at -$50 PNL.
    Jan 22, 2015. 08:43 PM | 1 Like Like |Link to Comment
  • Sears And 7-Foot Hurdles [View article]
    The business of Sears always horrifies me. I feel like Sears and Aeropostale are the capital allocation equivalents of a teenager playing with a flamethrower among large piles of cash. I'm also always surprised that the operating executives of such companies persist in trying to operate them rather than selling off assets and liquidating them. I mean, incentives explain behavior, but still, it surprises me.
    Jan 22, 2015. 08:08 PM | 1 Like Like |Link to Comment
  • What Every Investor In Chinese ADRs Should Know About China's New Draft Foreign Investment Law [View article]
    Thanks. Nice article. One minor suggestion -- I would define acronyms like VIE (Variable Interest Entity) when you first use them so as to make the writing maximally accessible.

    I've looked at a number of these Chinese ADRs that are Cayman Islands companies, with VIE contracts in place with the Chinese firm. I generally found this suspicious so I would give them significant valuation haircuts due to handicapping in a very approximate way all the nationalization of firms that has been carried out by socialists in the past, as well as the lack of any private equity premium. I remember I almost bought into Baidu in the mid $80s which I considered nearly investable but the haircut still didn't seem sufficient when I felt I had such little ownership and control.

    Everything else in China has been un-investable for me, but it's mostly because I don't understand their firms very well. One exception was I bought into Xinyuan Real Estate (XIN) as a statistical experiment. I'd be interested if you have any thoughts on that company. It's still pretty opaque to me after studying it for quite some time.
    Jan 22, 2015. 07:55 PM | Likes Like |Link to Comment
  • Why I Was Wrong On Searchlight Minerals [View article]
    This has been a very interesting pair of articles Ruerd. Thanks -- I've been learning about gold from them.

    Like others, I am extremely impressed that you would go back and challenge all your previous conclusions. That's the Charlie Munger technique and I am a huge fan of that approach of dialectics / challenge one's own assumptions. A search for disconfirming evidence is in general a good way to critique a thesis -- if you try to kill your own idea, and it can't be killed, then the idea must be good.

    I have read all your non-paywalled articles and personally would read articles even on super obscure opportunities.
    Jan 22, 2015. 07:40 PM | 1 Like Like |Link to Comment
  • Merger Arbitrage Forum (Though Any Arb Can Be Discussed) [View instapost]
    Long ATLS, short TRGP (long 11 ATLS, short 2 TRGP).

    If all goes well you should end up with the spin-off purchased with a very low P/E, or for free (depending on quoted ATLS, TRGP prices).

    Currently I am just watching this, because I had some poor experiences with this sort of thing in the past. But if I understand them better I might do this sort of thing in the future.

    Writeups:
    http://seekingalpha.co...
    http://bit.ly/1yoinzD
    http://bit.ly/1yoipYc
    Jan 15, 2015. 02:32 PM | Likes Like |Link to Comment
  • Powers Of 10 – How To Give It, Invest It, And Spend It In 2015 [View instapost]
    Success Academy's donation page mis-spelled "receive." I find this amusing...
    Jan 12, 2015. 05:51 PM | 1 Like Like |Link to Comment
  • King Digital: Largely Undervalued With Plenty Of Upside Potential [View article]
    I am long KING. My estimate of intrinsic value is $18 per share. Previously it was $20.

    Unfortunately, King Digital's investing relations took 2 months to address all of my questions (and nearly 1 month for an initial response). This required a total of 7 emails from me at roughly one week intervals asking why the IR contact had not responded. I therefore pondered the following question: if management cannot be bothered to respond to the company's owners, why should owners entrust management with our hard-earned money?

    However, King Digital has generally done a pretty good job of capital allocation and carrying out the development of new games. I suspect therefore that the problem I observed is likely to just be an anomaly, and they did apologize for the delay.

    Has anyone else experienced similar problems?

    I am always quite surprised by how non-responsive some companies can be to investing relations questions. This has gotten to the point that it has become a standard due diligence test for me.

    I call it HOPWABA: Hire Only People Who Appear to Be Alive.
    Jan 11, 2015. 04:00 PM | Likes Like |Link to Comment
  • Searchlight Has Found A Procedure For Extracting Gold From Clarkdale Slag [View article]
    I generally dislike start-ups, which I define as speculative vehicles that might eventually result in an operating company. This may be because I have seen so many people in my field of computer science getting excited about the highly speculative lottery tickets that are tech startups. In expectation the "founders" lose money for years pursuing them, as do the angel investors and VC funds that sponsor them.

    Generally I think the opportunity costs are too high to be doing this sort of thing, especially on a risk-adjusted basis. Unless there is a combination of many positive factors like having a gigantic edge due to really excellent people, the payoff on success is astronomical, the price is super cheap, and/or the probability of success is high. It would also be helpful if people generally hate or are ignorant of the sector so the sector is not oversupplied with a surplus of new entrants. (e.g. wastewater processing, mainframe computer consulting, obscure niche markets).

    In terms of statistical inference an investor must make valid inferences from observable facts to estimate unknown variables such as intrinsic value. In general skepticism and induction should result in the conclusion that a profitable operating company will not exist where previously there was none, except in very auspicious circumstances. I am also skeptical of many of these companies because as an operator I would simply liquidate many of them and give the shareholders an immediate payoff.

    For these reasons I would pass on Searchlight. Unless the payoff on success is say 100x and the management has indicated an definite timeline for liquidation in a way that limits shareholder losses on failure -- and they have every incentive to follow their word.
    Jan 10, 2015. 07:14 PM | Likes Like |Link to Comment
  • 6 Strategies For Controlling My ^#&%#!@ Emotions [View instapost]
    Nice post and comment by Sheldon.

    When I was younger I went through some fairly difficult situations (e.g. divorce) and coped with depression. I wrote up my recipe for how to be happy after that [1]. I found what works for me is to improve all areas of life simultaneously -- a balance of health, relaxation, exercise, socializing, work, positive attitude, etc. This is difficult but works for me.

    I found that after beating that depression, I do not seem to process emotions the same way. First of all I am incredibly skeptical of emotions, since my emotions certainly did not help me, but systematically fixing all the problems did. My usual emotions now are, "I am comfy and warm. I do not much care about other issues." But occasionally they change to, "You have to be insane to think that ringing that bell will get you donations from someone who gets migraine headaches."

    I was recently buying some shares of the fracking sand producer HCLP and I suppose other people were angry about fracking causing health problems, earthquakes, awakening giant lizards over Tokyo, worried about oil price downturns, or 52 week price lows. My emotions were, "I'm glad I have a warm house. The cheap gas prices are convenient. I should write some more on the paper and make some crackers."

    I agree with controlling one's environment. I do not have a cell phone and do not like most people being able to find me. Especially if they are annoying or have bells.

    My usual process is I wake up and do what I want all day. And optionally look for another job if my job is interfering with my process. My current job is not bad because it is nearly devoid of any rules. Buffett called that "arranging your life so you don't have to do what you don't want to do."

    [1]. http://bit.ly/1zXDhDz
    Jan 8, 2015. 05:02 PM | 4 Likes Like |Link to Comment
  • New Year's Irresolution [View instapost]
    I mentally picture you doing every investment by calling up 10 CEOs, translating financial statements from Sanskrit through Buddhist translators hired on a discount basis, and then establishing a complicated series of "ley lines" over a map of Ireland which you use to organize the battle map for your position (which consists of long stock, short foreign subsidiary, currency hedging, short over-priced related company, short OOM call option, etc).

    I usually have only the vaguest idea of what's going on, but hope you get some pheasants!
    Jan 4, 2015. 07:58 PM | 2 Likes Like |Link to Comment
  • The Outsiders: Eight Unconventional CEOs And Their Radically Rational Blueprint For Success [View article]
    Nice interview. Here is another slice from it about Katharine Graham:

    http://bit.ly/1yojS3a
    Jan 4, 2015. 12:55 PM | Likes Like |Link to Comment
  • Exclusive Interview With Seabridge Gold's CEO [View article]
    @Ken: Thanks for your thoughts. I am generally not that much into macroeconomic investing, but I could see the U.S. purchasing power getting cut in half after the debt is monetized. I would not say it is a sure thing -- other popular ways to discharge debt include war, the economy outgrowing the debt, defaulting on politicians' promises, firing politicians, the lingering Puritan ethos in the U.S. like personal and fiscal responsibility, etc.

    Good luck with your thesis. Don't oversize the position. Murphy's law and all that.
    Jan 3, 2015. 09:22 PM | Likes Like |Link to Comment
  • Exclusive Interview With Seabridge Gold's CEO [View article]
    Thanks for your thoughts Ken.

    My concern with SA is that the gold price is currently about double the 100 year historical average gold price in real dollars [1]. I think it is reasonable to expect gold to have a relatively constant buying power as it has had for thousands of years. So this presents the possibility that the gold price could go down quite a bit due to mean reversion. In that scenario of significantly lower gold prices, it appears that SA's projects could be uneconomic.

    What is your take on that risk?

    [1]. http://bit.ly/19FfOw7
    Jan 2, 2015. 12:37 PM | Likes Like |Link to Comment
  • Exclusive Interview With Seabridge Gold's CEO [View article]
    Nice article Ken!
    Jan 1, 2015. 01:25 PM | Likes Like |Link to Comment
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