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Sunday, January 13, 2013

investment ideas, too many

I had a giant position in Bank of America 'A'-warrants last year. I didn't mean for it to happen, but as BAC got cheaper and cheaper in 2011 the position size just grew. It wasn't 100% of my net worth, but it was close.  Even though BAC did remarkably well in 2012, I actually made a huge mistake owning it.

One of the best fundamental investors I know, sent me a write up on USG. He made a very good case for a 40+ USG stock and this was when USG was trading below 7 a share. I thought his analysis was correct, but I stubbornly kept my full position in BAC, and when my brain started to dethaw, USG had climbed over 10 and I refused to buy it. Of course now USG is trading over 29 a share.

I am not complaining about a great year, but let's be honest -- I screwed up. 

Currently, I'm riddled with lots of possibilities. Here are some I am thinking about. 

1. BAC.A.WS -- still cheap, BAC will much likely be worth much more in the future and the leveraged nature of these instruments should be beneficial. 
2. CHK -- very compelling write up done at OID, where the valuation is 50+, not bad for a stock trading at 17 a share. Holds one of the best positions in natural gas, the only commodity I am aware of selling below it's cost. 
3. INTC - worlds largest chip maker, selling for under a 10 multiple. Large R&D should allow them to start competing effectively with power sipping chips. The company is repurchasing a large amount of shares. Maybe profit margins will fall down much larger than I expect and it won't be as cheap I, but it's likely worth a hell of a lot more. 
4. ORCL  -- company with a sticky business and large cash flows. CEO has done an awesome job allocating capital and is repurchasing shares left and right. Seems like a steal with an EV/EBITDA at 8.73
5. WLP -- company is trading at a very low PE, and repurchasing a maddeningly amount of shares. I honestly don't know much about WLP, but I can't help being intrigued. 
6. FIATY -- Italian car company with world wide operations. Makes Ferrari, Maserati, Lancia, Fiat, Alfa Romeo (Top Gear loves you) and now it owns most of Chrysler and will probably own all of it. Fiat trades at EV/Revenue of 0.18, if profit margins can increase to what their impressive CEO says they can make -- Fiat is a steal. There is a good write up done by Greenwood on this. You can even own a parent company, Exor, that's trading at a discount to NAV. Very interesting.
7. Call options on MBI, if not the common. MBIA, seems outstandingly cheap, especially if they get their BAC settlement soon. Reminds me a Cornwall idea -- the question is when will they settle? 
8. Put options on Chinese Cos -- could very well see a lot more delistings very soon. Year end is up for these companies and with more auditors worried about signing off on crappy financials -- we could see some nice money made on puts. 
9. Japanese net-nets. Oddball, Geoff Gannon, Pabrai, Spier have shown lots of Japanese companies with negative EV, positive earnings, and dividends -- some even buying back shares. 
10. Japanese cos, that are good but selling cheap. Aida was an example of this, but Monex, Pronexus and others are probably very cheap and have more realistic ROE. 
11. Somehow copying Kyle Bass' trade on JGB. His analysis seems obvious, not sure how to do a trade off this and not sure what the pay offs are; but very interesting. 


Unfortunately, I don't know of any great short ideas.  Lots of things I don't like, but nothing that grabs me. 


Lots of things to think about.  Life is good. 

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