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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (50496)	1/4/2013 1:30:52 AM
From: Spekulatius	Read Replies (2) \| Respond to of 78476

Re JMBA - yes we do have experience with their stores. My wife is hooked on Jamba Juice (Mango a gogo!)and she kind if sucked me in too. I think they have the best product of all the Juice stores out there, and there is some brand value. The problem is that a Juice Store is a pretty seasonal business and even in the season, it's going to be busy only when it is hot for the most part. They try to expand into breakfast offerings, but I don't think that is working well. In short I like the product, but i think it is of limited market potential. I don't own the stock even though I looked at it several times during the last few years, since I like the product.

To: Jurgis Bekepuris who wrote (50496)	1/4/2013 2:44:45 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78476

Care to elaborate why you think APA is expensive ? Like APA - 3B BOE of proved reserves on 12/31/2011 at a 42B$EV, which is ~14$BOE. Half of those reserves are oil and another chunk is international NG, which does not have the same pricing issues that NA NG has. They have decent LT track record of growing reserves. even assigning no value to midstream and unproved reserve, APA does not look expensive to me. DVN is somewhat cheaper than APA based on proved reserves, but has a much higher exposure to NA NG.

To: Jurgis Bekepuris who wrote (50496)	1/4/2013 11:03:16 AM
From: benbuffett	Read Replies (2) \| Respond to of 78476

Hi Jurgis, FWIW The CEO was on CNBC this morning, you probably can catch a replay on their web site. Who was talking about them at VIC meetin? I notice that Wedbush Sec. has big stake. The CEO has such a small stake in the company he founded?! don't like this They have no debt, like this Their in the healthy mkt., like this Interesting little company BB

To: Jurgis Bekepuris who wrote (50496)	1/6/2013 2:28:52 PM
From: Paul Senior	1 Recommendation Read Replies (1) \| Respond to of 78476

MKL, other insurance companies: Background: Mr. Buffett asks or has asked that you judge him/BRK on the growth in BRK's book value. I like that in general for companies, and for insurance companies in particular, that seems to be a standard way they themselves and insurance analysts evaluate insurance company performance. I pulled out my file on MKL. It goes back about 12-14 years. In years past, MKL has increased stated or adjusted book value at a good clip -- maybe 20% annually. Investors paid up for that. It was said (article(s) in my file) that if you could get MKL at 1.5x book, you were getting a bargain -- (it often sold for 2x). The thing about Markel was that it had a large common stock portfolio (in absolute terms and relative to what other insurance companies had. Lots of "good" stocks in addition to its fixed-income holdings. Bruce Berkowitz (Fairholme Fund) in a notable 10/20/10 Bus. Week article ' "You only need a Few Ideas to Be Fabulously Wealthy") particularly like Markel, his idea being even with breakeven on underwriting, if MKL had a large enough equity portfolio and could get decent returns on it, that would really do wonders for the book value and stock price. I've look a little at MKL now, and here's what I see that's changed that I don't like. The stock equity portion of the assets doesn't seem (to me) to be large enough relative to the book value to make a large enough difference to profits (book value increase). Otoh, the company has in recent years started acquiring its own outside (non-insurance) businesses in addition to its holdings of common stocks, and so these privately-held operations of MKL may do very well going forward. Right now, disheartening to me, if I look at the twenty year history of MKL (ref. annual report), roe generally has been decreasing -- from maybe around 20% to 9% (on rolling average). And so, while stated bv keeps increasing, the rate of that doesn't seem it would be so good now, and so I and maybe others, aren't so willing to pay even 1.5x bv for the stock. The stock is now at 1.1x. Going a little further, I decide to see how MKL has increased its book value compared to some other insurance companies I might be interested in. Markel (MKL), Allegheny (Y), White Mountain (WTM) are all often compared to Berkshire (BKR) insurance in a junior way as regards manager expertise, use of insurance float, book value growth, business acumen, high $ stock price. Here's the current stated bv $/sh as reported by Yahoo, compared to what I can find ten years ago: MKL: 395/140 = ~2.8x RNR: 68/23 = ~3x RGA: 91/31= 2.9x ASI: 35/14 = 2.5x Y: 388/177 = 2.2x MHLD: not enough history AV: data not found NWLI: 376/192 = ~2x PL: 58/29 = 2x WTN: 579/331 = 1.7x Several aspects here: Ten years is past history. Some of these companies may be more interested going forward in growing bv than others. (AV,MHLD pay a dividend for example -- the others do not and so presumably reinvest in themselves 100%). Past performance may not indicate future performance. Also importantly, imo as important as how stated bv has grown or will grow, is the price you pay for that book value. I show from Yahoo: MKL: 1.11x RNR: 1.18x RGA: .61x ASI: .55x Y: .89x ("adjusted bv", I belive) MHLD: .78x AV: .86x NWLI .43x PL. .51x WTN: .92x My actions: I'll pass on MKL for now-- wait and consider for a buy maybe at lower price. RGA: I'm holding a few shares and following you guys here who've bought. I may add more shares. At this time I'd rather have a few more shares of RGA than initiate MKL. I have a few shares of ASI, MHLD, AV, NWLI (ten-year holding for me for NWLI). I've no position in RNR or Y. I'll consider WTM: According to the annual report, management believes the stock is materially undervalued (on book value) and they have bought back shares. They've made some sales of some operations, and they are loaded with cash apparently. They say they will continue to bring in shares. They have some runoff operations that have caused them losses, and which they say they will be rid of by 2015. --- Some of the statements and numbers I'm showing are from my memory and/or notes. Anyone actually interested in any of these stocks or my comments ought to double-check my comments and numbers.

To: Jurgis Bekepuris who wrote (50496)	1/6/2013 2:47:31 PM
From: Paul Senior	3 Recommendations Read Replies (2) \| Respond to of 78476

MKL, other insurance companies: Background: Mr. Buffett asks or has asked that you judge him/BRK on the growth in BRK's book value. I like that in general for companies, and for insurance companies in particular that metric seems to be a standard way they themselves and insurance analysts evaluate insurance company performance. I pulled out my file on MKL. It goes back about 12-14 years. In years past, MKL has increased stated or adjusted book value at a good clip -- maybe 20% annually. Investors paid up for that. It was said (article(s) in my file) that if you could get MKL at 1.5x book, you were getting a bargain (it often sold for 2x). The thing about Markel was that it had a large common stock portfolio (in absolute terms and relative to what other insurance companies had). Lots of "good" stocks in addition to its fixed-income holdings. Bruce Berkowitz (Fairholme Fund) in a notable 10/20/2000 Business Week article "You only need a Few Ideas to Be Fabulously Wealthy") particularly liked Markel-- his idea being even with breakeven on underwriting, if MKL had a large enough equity portfolio and could get decent returns on it, that would really do wonders for the book value and stock price. I've looked a little at MKL now, and here's what I see that's changed that I don't like: The stock equity portion of the assets doesn't seem (to me) to be large enough relative to the book value to make a large enough difference to profits (book value increase). Otoh, the company has in recent years started acquiring its own outside (non-insurance) businesses in addition to its holdings of common stocks, and so these privately-held operations of MKL may do very well going forward. Right now, disheartening to me, if I look at the twenty year history of MKL (ref. annual report), roe generally has been decreasing -- from maybe around 20% to 9% (on rolling average). And so, while stated bv keeps increasing, the rate of that doesn't seem it would be so good now, and so I and maybe others, aren't so willing to pay even 1.5x bv for the stock. The stock is now at 1.1x. Going a little further, I decide to see how MKL has increased its book value compared to some other insurance companies I might be interested in. As most of us know, Markel (MKL), Allegheny (Y), White Mountain (WTM) are all often compared to Berkshire (BKR) insurance in a junior way as regards manager expertise, use of insurance float, book value growth, business acumen, high $ stock price. Here's the the current stated bv $/sh as reported by Yahoo divided by the book value ten years ago: MKL: 395/140 = ~2.8x RNR: 68/23 = ~3x RGA: 91/31= 2.9x ASI: 35/14 = 2.5x Y: 388/177 = 2.2x MHLD: not enough history AV: data not found NWLI: 376/192 = ~2x PL: 58/29 = 2x WTN: 579/331 = 1.7x Several aspects here: Ten years is past history. Some of these companies may be more interested going forward in growing bv than others. (AV,MHLD pay a dividend for example -- the others do not and so presumably reinvest in themselves 100%). Past performance may not indicate future performance. Also imo as important as how stated bv has grown or will grow, is the price you pay now for that book value. I show from Yahoo: MKL: 1.11x RNR: 1.18x RGA: .61x ASI: .55x Y: .89x ("adjusted bv", I believe) MHLD: .78x AV: .86x NWLI .43x PL. .51x WTN: .92x My actions: I'll pass on MKL for now-- wait and consider for a buy maybe at lower price. RGA: I'm holding a few shares and following you guys here who've bought. I may add more shares. At this time I'd rather have a few more shares of RGA than initiate MKL. I have a few shares of ASI, MHLD, AV, NWLI (ten-year holding for me for NWLI). I've no position in RNR or Y. I'll consider WTM: According to the annual report, management believes the stock is materially undervalued (on book value) and they have bought back shares. They've made some sales of some operations, and they are loaded with cash apparently. They say they will continue to bring in shares. They have some runoff operations that have caused them losses, and which they say they will be rid of by 2015. --- Some of the statements and numbers I'm showing are from my memory and/or notes. Anyone actually interested in any of these stocks or my comments ought to double-check my comments and numbers.

To: Jurgis Bekepuris who wrote (50496)	2/4/2013 1:11:54 AM
From: Jurgis Bekepuris	1 Recommendation Read Replies (3) \| Respond to of 78476

My top 10-ish positions in no particular order: UVIC, GLW, MSFT, MGDDY, MHR-D, DRAGF. Out: PWRD - reduced position New positions: VASTN.NL, SHOS, PFHO Positions increased: BRK, MKL, STX, AAPL Positions reduced: PWRD, JNJ Positions eliminated: DELL, GST-A, BAC, ARY, RIO Flip-flop: Prefs: Sold GST-A, since GST's results and balance sheet do not look good to me. Sold ARY at over par price with yield-to-possible-call dropping. With stocks running up, I should be selling more, but most of my positions are good companies intended to be held for long time, so I am trying to hold. :) Not always successfully. Sold DELL before the current "going private" runup. It was IMHO the weakest of my tech holdings, although possibly also the cheapest on P/S metric. Sold BAC, since I am not sure I can value it well and the prospects seemed unclear. Was planning to add to other bank shares, but most ran up. Sold RIO due to the extraordinary losses. Shares are running up though due to the increased ore prices. Reduced oversized PWRD position when it ran up to $12.XX. Not really a valuation call, but rather a position size call. Sold some JNJ - here's the "forever hold" company that Buffett dumped and I am selling on valuation. There's a number of other "good companies" that seem to be overvalued. I may sell them if the prices rise even more. I bought more BRK and MKL for reasons outlined in the last writeup. Both have been rising though and I don't plan to add more at current prices. Added to STX and AAPL. Both seem to be rather attractive tech plays. Both have been discussed here at length. Bought some SHOS. Stock has been running up. Bought a tracking position of microcap PFHO that was discussed here. Bought a small position in VASTN.NL mentioned by Clownbuck here.