The wisdom of Sir John Templeton
To keep investing you have to change your ideas all the time.
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Size matters ...
If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that. - Warren Buffet'99
What Warren is telling us here is a small investor has a real advantage over the big money. He even has the statistics to back this claim. However, a little contradictory is his own performance at Berkshire and till now it still looks like it is killing the Dow.
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Wait for the kill.
Always put your new investment ideas on a watch list, or take a small position before rushing in. If it’s a truly great bargain, there’s no need to hurry. - John Templeton
This is very important. Warren Buffet has enforced this idea in his own way. It is important to wait for atleast two quarters. Shoot the fish in the barrel, when the water has ran out. This gives an interesting spin on the risk. Its absolute zero risk. Its just a no-brainer, the idea as well as the principle. The invest idea should be so obvious and so risk free at this point that you can't make a mistake. The value just pops up at you and there is no "downside risk".
Price is what you pay, value is what you get. - Benjamin Graham
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results. - Warren Buffet
I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out. - Warren Buffet
This price consciousness is very important. When all the speculation has run out, the negative psentiment will drain the water out so much that a value investor can make a killing.
You only find out who is swimming naked when the tide goes out. - Warren Buffet
This is also a very important idea. However, it could not be translated to time. As it happens when opportunities appear and if you have been waiting for quite some time, it might become very difficult to wait for the opportunity to become even fatter, because of fear of it vanishing or becoming thinner.
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. - Warren Buffet
Even better, buy a wonderful company at a wonderful price.
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NRF - Northstar Realty - REIT
Do numbers tell a story ?
- $11 earned per share and every $1 of long term investment has helped retire atleast $2 of debt, even in this difficult environment.
- The company is doing a good job of retaining earnings.
- Also it has a good portfolio investments.
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FITB - 5/3 BankCorp - Regional Bank
2008 Annual scorecard:
1. $1.1B of Preferred Stock to private investors
2. $3.4B of Preferred Stock to US Treasury
3. Dividend cut will save $1B a year fro 2009
4. $4.6B of provision expense - big bath charge - if no losses occur, it could be used to retire both 1. and 2. Preferred
5. $965M goodwill impairment charge - another big bath charge
6. Net losses as a % of loans and leases = 3.23%
7. Consumer credit charge offs = 2.08%
8. Commercial credit charge offs = 3.99%
9. Most losses coming from Michigan and Florida.
10. $1.1B Acquisition of First Chartered - $31/share - Animal spirit or prudent buying ?
11. fredom Bank receivership through FDIC - $257M in deposits.
"The Bancorp does not originate subprime mortgage loans, does not hold credit default swaps and does not hold asset-backed securities backed by subprime mortgage loans in its securities
portfolio."
2007 Annual scorecard:
1. Net losses as a % of loans and leases = 0.61%
2. Consumer credit charge offs = 0.84%
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ACAS - American Capital Strategies
The company is seeing significant insider buying. In my opinion, it would do better by becoming a holding company. The company boasts of paying dividend returns which exceeded the market returns. A better use of those returns would have been to pay back debt and investing the retained earnings to improve value. The dividends are really suspect here and most portion of the dividends may have come from additional-paid-in-capital.
