Last month I had the pleasure of attending the 2016 Pabrai Funds and Dhando Holdings annual meeting in Chicago. It turns out, this was the last Chicago meeting that Mr. Pabrai will be holding for his funds going forward. For those unfamiliar with Mohnish Pabrai, he is the founder and CEO of Pabrai Funds, and currently manages roughly $400mm in capital for individuals and institutions. Mr. Pabrai adheres to a value investment philosophy, whereas he has cloned Warren Buffett’s techniques and has applied them ever since he began investing 1994. Since then, Mr. Pabrai has had phenomenal returns over the years. Recently, however, his funds have under-performed over the last five-year stretch, which in Mohnish’s words, is an anomaly. Mohnish is very bullish on the future of his funds, which we’ll get to later. … [Read more...] about An Evening with Mohnish Pabrai – Pabrai Funds Annual Meeting 2016
Before I delve into this post, I would like to preface that this does not advocate Trump for his presidency or push my political beliefs. This, after all, is a value investing blog. I simply came across this book when in the book store (yes people still go to those) and couldn't help but buy it out of curiosity. At my previous job, during end-of-year office presentations this is a book that we would often joke that a managing director would be reading. It made me wonder how many financiers have actually taken the time to read it and whether it was worth the read. I do recommend the book for it's entertainment factor, but not has a must-read book for practical business or investing application. However, there are a few over-arching themes and points made within his "The Elements of the Deal" chapter that I think we can garner and utilize successfully in investing. Outside of these themes is mostly a biography of Donald Trump covering his life up until the late 1980's written with Trump's well-known chutzpah (for better or for worse). … [Read more...] about The Art of The Deal
You probably don't need me to tell you that Apple reported earnings yesterday. Every financial media outlet out there has some type of article announcing the results. Here are a few of the article's I've come across this morning: Apple's earnings beat has some analysts worried it was too impressive Apple Earnings Fall on iPhone Slump Apple's Earnings: Analyst upbeat as 'toughest two quarters' now behind it Apple Earnings Fall on iPhone Slump … [Read more...] about Loving and hating Apple (NASDAQ: AAPL)
I came across the video, Crazy - a Story of Debt by Grant Williams (embedded video below), the other day through The Investors Podcast, and it's worth the watch. If you don't have the time to watch the entire 40 minutes, half way through will do the trick. Believe me, the 20 minutes is worth the time. It is very well presented, informative, and actually fairly comical. We are clearly living in uncharted territory. There are a lot of uncertainties in our midst: Brexit, possibilities of future referendums from the EU, raises in interest rates, continuous terrorism, a new US president, national and global debt and the list goes on. Now, I don't want to get into which of those uncertainties I'm actually worried about. The point here is that the market is very worried about several of these and that these uncertainties could be a catalyst to making the market correct itself. I'll go on record that I believe the market is overvalued at current levels, but if you watch the video you don't need me telling you that. With this knowledge, what should we investors do? Predicting the stock market will prove to be futile From my post regarding where most investors stumble, predicting the market falls under speculating and isn't truly investing. It is good to understand the underlying drivers of today's stock market and what is causing the overvalution we are seeing. By doing so, you will be able to make thoughtful and rational decisions for your portfolio. Knowing that the market is overvalued and therefore moving your assets to cash or less risky assets in my opinion, is not predicting the market. I believe this is the case because I don't know when the market is going to correct itself. For all I know, it could happen two years down the line, or longer. Take a look at the history of bull and bear markets. This being the third longest bull market in history, it just solidifies my belief that I don't know what's going to happen or when. There have been longer bull markets, … [Read more...] about Predicting the Unpredictable
When I was growing up and first learned about dividends, I thought it was the greatest thing that I had ever heard to be true. "You mean if you own some stock, you can really get paid cash every so often, and potentially live off of it?" No doubt, I was hearing about people who were making thousands in dividends. Wouldn't that be nice? It wasn't until later I learned how much stock you would need to be able to live off of dividends, and even later still did I learn that maybe dividends aren't the greatest thing in the world. … [Read more...] about Dividends or no dividends?
I recently finished reading Seth Klarman's Margin of Safety, one of which I wish I had read earlier! I was able to find an online copy of this famous value investing book. If you're not familiar with Seth Klarman, he is a billionaire and founder of the Baupost Group, a value investment firm that manages about $30 billion. Before founding Baupost, Klarman worked for Max Heine and Michael Price of the Mutual Series Fund which is now part of Franklin Templeton. There, he was fortunate to learn how to invest unconventionally (value invest) and achieve high returns. After going to Harvard Business School, he helped found Baupost and quickly became known for this "unconventional" strategy of his. He is known as a very conservative investor, often holding large amounts of cash in times of high uncertainty. In these times, he has been known to hold up to 50% cash in the portfolio, waiting to deploy the capital in undervalued securities when the opportunity arises. This obviously takes a certain amount of discipline and patience to wait for these opportunities, as well as a considerable amount of faith from investors for allowing their holdings to be in such a low-return asset for a period of time. After 9 years of managing Baupost, he decided to impart some of his investment wisdom on the world by writing Margin of Safety: Risk Averse Value Investing Strategies for the Thoughtful Investor. Today, the book is out of print and can be bought for upwards of $1,500 for a copy! If you're interested in getting a copy, I would recommend typing in "Margin of Safety pdf" on Google and go with the free version from there. Although, one may argue that the $1,500 could be a bargain based on the insights you can gain from this book :-). The book is split into three sections: 1) Where Most Investors Stumble 2) A Value Investment Philosophy and 3) The Value-Investment Process. This post is focusing on the first section, covering a few chapters on "Where Most Investors Stumble". This … [Read more...] about Where Most Investors Stumble (Seth Klarman’s Margin of Safety)
Everyone compartmentalizes who they look up to for certain things. For investing, many look to Warren Buffett. For basketball some think of Michael Jordan, others will consider Lebron James or Steph Curry (take your pick). Well, I'm here to discuss Guy Spier, who is an investor I learned about roughly a year ago and is someone I look up to for investing and life advice. Since that time, I've read some of his annual letters, watched the videos of his student Q&A visits, listened to a podcast he has been on and read his book, The Education of a Value Investor. Guy Spier is the manager of the aquamarine fund, which has had exceptional returns, significantly outpacing the market. He also has a very decorated background. He received his MBA from Harvard Business School and also received a First Class degree in Politics, Philosophy and Economics from Oxford University. While Mr. Spier has proved himself to be an exceptional investor, what I have learned from him and look up to him for is not his investment success, but his life framework. I wanted to share a few insights from what I learned. Moral Compass and the Folly's of an Elite Education Out of Harvard, Guy Spier worked for DH Blair, a boutique investment bank and brokerage firm. Guy quickly realized that the place was full of greedy and self-interested people. They would dress up sub-par companies to be shining stars and sell them to the public. He was continuously torn at doing well at his job for his senior bankers and doing what was right. The job held him back from having the success and clear-mind that he wanted to have. DH Blair ended up leaving a tarnished mark on Guy's resume after the entire firm went down with securities fraud and other charges. Guy therefore had a lot of difficulty in finding a new job, because of DH Blair. He thought it was so interesting that coming from such a good educational background, that he and others would be pulled into going to firms like DH Blair. Why hadn't … [Read more...] about A few things I learned from Guy Spier
"Whereas high quality can be readily apparent, it takes keen insight to detect cheapness. The superior investor never forgets that the goal is to find good buys, not good assets." Howard Marks, Oaktree Capital Management. Company overview FitBit was founded in 2007 by James Park and Eric Friedman, who are still the CEO and CTO of the company, respectively. Fitbit is a developer of wearable devices that track an individual's health. It offers products which can track a person's activities, such as calories burned, sleep quality, steps and distance. The Company IPO'd in June of 2015, raising ~$530 (pricing at $20.00 per share). Current share price as of 6/14/2016 is $13.01. … [Read more...] about Fitbit (NYSE:FIT) Priced at no growth