3 Short Quotes from Ken Heebner

So, Ken Heebner hasn't been getting the best of returns of late. In fact, as this article points out, he's been getting rather bad returns--and for a while.

Nevertheless, as these three quotes show, Heebner hasn't changed his general strategy:

1. "“Most people think this is the worst time in the world to be optimistic, but my portfolio is positioned for strength in the U.S. . . I am functioning in a contrarian mode.”

2. "[Negative sentiment] historically has been associated with maximum points of opportunity for investing."

3.  "I am completely outside the mainstream. I see the mainstream in the distance."

Will Heebner's fund come back yet again? Or is an investment in the banks ultimately a doomed strategy?


My own view is that if anyone can pull off a successful investment in them from here that man is Heebner--but even so I wouldn't want to join him in the bet.

How to Play Poker (or Invest) Like David Einhorn

In some circles, David Einhorn is admired as much (or even more) for his poker abilities than his investing skills. But as Einhorn himself points out in this article his strategy with both is similar. 

Einhorn has said his approach to poker resembles his approach to investing: He doesn’t play a lot of hands. When “the situation feels right, I put in a big, aggressive raise with a marginal holding,” he said in a 2006 speech. “It is very hard to describe how I know the ‘feel,’ and sometimes I get it completely wrong. But to do well in a poker tournament, you have to recognize a few non-traditional opportunities and you need to get people to sometimes fold the better hand. I think we invest similarly. By this, I mean that most of our investing lines up nicely in the disciplined, traditional value camp—very low multiples of book value, revenues, earnings, etc., but occasionally we are opportunistic and invest in situations that are difficult to justify under traditional criteria."

The article contains some inaccuracies--for example, Einhorn wasn't bluffing and thus couldn't have been out-bluffed--but in addition to the above it contains how many millions Einhorn won playing poker this time and how Einhorn felt doing so.

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.

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.

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.

Seeking Alpha Article Quotes Marty Whitman

A post by Chuck Carnevale showed up in my news feed today because it contained quotes from both Warren Buffett and Marty Whitman (among others).

It's a good post, and one that that readers of this blog may enjoy reading in full. As an example of its value, here's the quote by Marty Whitman:

"I remain impressed with how much easier it is for us, and everybody else who has modicum of training, to determine what a business is worth, and what the dynamics of the business might be, compared with estimating the prices at which a non-arbitrage security will sell in near-term markets."

This, Carnevale says, basically means that "it's easier to value a business based on analyzing its fundamentals than it is to try and guess where the price of the stock may go over the short to intermediate term."

I agree with that, as well as some other things from the post. Here's the link for anyone who'd like to read it in full.