tag:blogger.com,1999:blog-5389144729834496735.post1536893239445769014..comments2024-03-17T05:15:55.634-04:00Comments on The Brooklyn Investor: Y So Cheap?Unknownnoreply@blogger.comBlogger14125tag:blogger.com,1999:blog-5389144729834496735.post-35807190103385850372014-08-12T12:15:19.356-04:002014-08-12T12:15:19.356-04:00Wow, that's amazing. I did look at that a whi...Wow, that's amazing. I did look at that a while back. I thought it was great they were selling land high and buying back share cheap. And at some point it looked like that arb was played out. But then the land leasing took off and they started getting paid for use of the land as much as they used to get selling it (or something like that). <br /><br />I'm not sure how to put a value on that... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-86289018021761262432014-08-12T09:57:15.774-04:002014-08-12T09:57:15.774-04:00Any thoughts on Murray Stahl's long standing T...Any thoughts on Murray Stahl's long standing TPL investment? Seems interesting. Buying back shares each year. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-57814027098357591042014-08-12T08:33:34.843-04:002014-08-12T08:33:34.843-04:00Thanks! Much appreciated.Thanks! Much appreciated.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-57273081812541146392014-08-11T22:43:51.699-04:002014-08-11T22:43:51.699-04:00Oops, missed this question before... Sorry for the...Oops, missed this question before... Sorry for the late response. I don't know about 3G/Buffett. The question would be which 'platform' it would fit into. It seems like if they are selling certain brands, it would be easier for someone in a similar business to buy the brands, like Spectrum, Jarden etc... where the brands can fit in. If 3G/Buffett bid for it, what would it be attached to? <br /><br />I don't know how they would run it without a hq function somewhere... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-88584724896903483072014-08-11T08:18:46.342-04:002014-08-11T08:18:46.342-04:00There is some discussion in the comments section u...There is some discussion in the comments section under the POST posts; the result is disappointing for sure but if these are short term hiccups the POST story should still be intact. I am not too worried about it yet, but I haven't bought more shares either... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-46133340743979539062014-08-11T02:21:46.429-04:002014-08-11T02:21:46.429-04:00Thoughts on Post?Thoughts on Post?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-35084742934140436692014-08-10T18:31:05.426-04:002014-08-10T18:31:05.426-04:00I won't argue with that. MKL has a much bette...I won't argue with that. MKL has a much better long term track record and importantly, there is continuity of management there; the same people that is responsible for the great long term record is still there. Y has a new equity manager and new private business manager so they may be wild cards at Y. <br /><br />But still, I think it is interesting. I don't look at BRK and say that is the best and then stop looking or writing about other ideas, so I won't stop at MKL either.kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-49362353496807162062014-08-10T10:30:44.435-04:002014-08-10T10:30:44.435-04:00Isn't MKL at close to 1.2x BV a much better in...Isn't MKL at close to 1.2x BV a much better investment? You still have Tom G. increasing equity % of portfolio.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-33729131160205343952014-08-10T07:40:00.428-04:002014-08-10T07:40:00.428-04:00That's a fair point, and the S&P is a hard...That's a fair point, and the S&P is a hard hurdle to beat. I wouldn't argue too much with someone that says the S&P is better because is good.<br /><br />And yes, vola is not really an indicator of risk to me either. <br /><br />But what I failed to get across in my post (that came to mind later on) was that Y's performance, actually, is good given their really gloomy world view. It's like they achieved positive returns even when they didn't really want to participate much in the world. Compare that to active fund managers that are, for the most part, fully invested (equity mandate) so they have their pedal to the metal and yet fail to outdo the index. <br /><br />When you think about it that way, Y has done really well in comparison to that. So underperforming slightly without really trying versus underperforming with full participation seems to me like a no-brainer. <br /><br />The 7-10% return is realistic to me and is probably a return higher than what you can expect from the S&P over time, so yes, maybe lazy given that it's a single company (and many companies have higher ROE's), but I think it's conservative and realistic. <br /><br />But I get your point.<br /><br />Also, I realize that I didn't really point to objective evidence that Y is conservative. So maybe later when I have time, I will make a followup post that shows investment leverage / float leverage / equity as a % of net worth etc... over time to see if Y was in fact more conservatively managed than other similar firms. <br /><br />And then maybe we can look at those metrics today and see if they are in fact as conservative. Obviously, with the Transatlantic merger and higher float leverage, they may not be as 'conservative' by those metrics as in the past. <br /><br />Oh yeah, and as for the "idiosyncratic" nature of Y's story, yes, you would have to be comfortable with their approach. Otherwise it's better to stay away and invest in more 'conventional' names or the index.<br /><br />Thanks for reading and commenting. <br /> kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-90751665544544207682014-08-10T00:09:15.041-04:002014-08-10T00:09:15.041-04:00Y is fairly valued. I would argue that it's n...Y is fairly valued. I would argue that it's not better than an index fund despite the historically low volatility that Y has seen (assuming management achieves sits target of 7-10% BVPS growth). Management points to the low beta to justify their existence, but I think the comparison is misleading. In an index fund, even if historical volatility is higher than Y's, it's probably much safer over the long run given its highly diversified nature and constant changing composition. By investing in Y, you're investing in an idiosyncratic story, so much more risk despite the low historical volatility. As we all know, beta and historical volatility are not true risk measures for long term investors. <br /><br />I dislike the fact that management only targets a 7-10% return. Seems lazy to me.<br /><br />Overall, it's not a great investment, but better than average given the low probability of you losing permanent capital.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-91609233106082258162014-08-09T21:07:34.268-04:002014-08-09T21:07:34.268-04:00Unrelated to this, but in your strike zone - Do yo...Unrelated to this, but in your strike zone - Do you think 3G and Buffett should bid for the portfolio of brands that P&G is looking to sell? Seems like assets where they could apply their formula to spruce up some aging brands.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-7107831642386255772014-08-09T13:11:21.225-04:002014-08-09T13:11:21.225-04:00The general market has seen multiple expansion ove...The general market has seen multiple expansion over the years, while Y has not. Given the fact that Y's performance has remained the same, Y is cheaper relative to the market than it has been for a long time. Also in absolute term, a 0.9x multiple to book is cheap, given the traditional conservative underwriting and reserving (which implies unaccounted value sitting there). Even buying at 1x book for a 10%ROE business is a good deal, if the business is run in a conservative manner, which is certainly the case with Y.<br /><br />I bought some a few month ago around 370$ and I will buy more when it falls below 0.9x book, which is a little over 400$ currently. It's not a stock that is going to make you rich, but I think the risk is actually less than investing in the general stock market, so I think a price concious buyer should do well with this stock.Clownbuckshttps://www.blogger.com/profile/10229774833219054115noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-73482618176887869502014-08-09T06:49:28.322-04:002014-08-09T06:49:28.322-04:00Hi, yes, that's a common rule of thumb for fin...Hi, yes, that's a common rule of thumb for financial companies (10% ROE = 1x BPS). And yes, passive index funds are good. But in this case, if you can get it for a discount (versus paying a fee (however low) for index funds plus realizing taxes on dividends and cap gains) it's not a bad idea. <br /><br />But yes, their lower returns are the reason it is cheaper than say, BRK or MKL. <br /><br />Plus the 10% ROE / 1x book rule of thumb is for financial companies and the reason is the risk often associated with financials (boom/bust nature of business; financial crisis every few years). But when you look back at Y, they tend not to have those booms and busts and make their returns in a remarkably and incredibly boring manner. <br /><br />Thanks for reading. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-76776930631350964262014-08-09T00:10:51.981-04:002014-08-09T00:10:51.981-04:00Ah, I see what you did there in the title! Very n...Ah, I see what you did there in the title! Very nice.<br /><br />As for Y being cheap, I think it's because their growth in BVPS is fairly low compare to the market. At 7-10% growth, it seems better to buy passive index funds. I remember you saying that a 10% ROE warrants 1 times book. And it seems like Y is below 10% ROE, thus the below book. What do you think?<br /><br />Hope you're more frequent with the post, always enjoy what you have to say. Cheers!Henryhttp://livingathome.weebly.comnoreply@blogger.com