Saturday, May 19, 2012

How Warren Buffett Earned His Billions

At one of my new blogs, which both focuses on how to read a book the 80/20 way and helps you to do so, I share a quote from The Dhandho Investor on how Buffett achieved his billions:
...Minimizing downside risk while maximizing the upside is a powerful concept. It is the reason Mr. Buffett has a net worth of over $40 billion. He got there by taking minimal risk while always maximizing returns. Most of the time, assets trade hands at or above their intrinsic value. The key, however, is to wait patiently for that super-fast pitch down the center.
While I have qualms about recommending the book wholeheartedly, as I say at the end of that post, the above point is dead on, and the book itself is definitely a worthwhile read. 

To see for that yourself, however--or at least to screen the book much better--check out the 8 quotes on achieving high returns with low risk that I share from it.

Sunday, May 13, 2012

This year, for Mother's Day, David Einhorn gave his mom "naches" like you wouldn't believe

So let's review. This week, David Einhorn:
  • made a lot of money when Herbalife and Green Mountain crashed
  • took down the Fed in an article that used the Simpsons as examples, and...
  • won a poker tournament for Hillel.
I don't know if any Jewish mom can top that for naches this year, but I doubt it.

8 Tips on Investing The Third Avenue Way

In a recent report by Third Avenue Value, Ian Lapey discussed the philosophy which has led to Third Avenue's investing success. Here are eight tips from that report, that you might find helpful:
  1. "Focus on the balance sheet and readily ascertainable net asset value."
  2. "Only invest in common stocks issued by companies with strong financial positions."
  3. "Focus on the long term."
  4. "Worry about investment risk, not market risk."
  5. "Do not try to pick the bottom."
  6. "Avoid industries in secular decline."
  7. "Own the fulcrum security [in a company's capital structure]."
  8. "Pay close attention to a management team's long-term track record and incentives."
For more on each, click over to read a paragraph going into more detail on each. And then, having done that, I wish you the best in applying them for profit!

Ian Lapey Seems Very Happy with Third Avenue's Investments in Hong Kong

Morninstar recently interviewed Ian Lapey about a trip he made to Asia investigating the strength or weakness of Third Avenue's (real estate) investments.

In general, Lapey expressed being pleased with what he saw. In particular, however, he repeatedly noted the discount to NAV that the fund's Hong Kong investments are selling at, the speed at which they're compounding NAV, and the strength of store traffic at particular locations in HK.

Check out the interview for more. There's video and a full transcript, with highlights, at the fund's web site.

I have just one question, however: If Lapey is so pleased, why did the fund recently decrease its position in Cheung Kong Holdings (by 3.4 million shares), and Henderson Land Development Company (by 14.3 million shares), and Wharf Holdings (by 1.2 million shares)?

Perhaps it's just portfolio rebalancing. Holders of the fund should be on the lookout, however, to see if the trend continues.

Monday, May 7, 2012

Einhorn's Current Thoughts on the Global Economy

Although we're sure to hear more details of his macro thoughts, and soon, in the recent conference call discussing Greenlight Capital Re's Q1 2012 results, Einhorn noted being concerned of...

  • the structural debt problems in Europe and Japan
  • the slowing Chinese economy
  • high oil prices, and
  • general inflation connected to the Fed's 0% interest rate policy.
What is he doing about it?

Again, we're likely to get more news on this soon, but in the call he mentioned owning...
  • longs or shorts on an individual, non-macro, and compelling basis
  • gold bars,
  • gold miners, and
  • other macro hedges.

You can read a full transcript of his comments over at Seeking Alpha.