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batbeer2  Batbeer

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  • Arjun Chan 2016-04-08 08:33
    Batbeer2, Did you forgot to leave a comment on my article :-)
  • batbeer2 2015-12-29 11:36
    Hi Peter, Alas, I think Aggreko's future will be less impressive than its past. Nowadays a larger part of their business comes from constructing more or less permanent electricity plants and "renting" that out. One could say they have become a financing company for third-world countries who need electricity generation capacity but have no cash. I like the short-term rental business of the portable generators much much better.  That IMHO is still a fantatstic ...
  • peterkooi 2015-12-29 06:13
    Hi Batbeer 2,

    You said one year ago:  If there are questions about Aggreko, I would be happy to share what I know about this great company.

    You still believe that?

    Bets.

    peter
  • rgarga 2015-02-15 08:54
    Would like to have a conversation re posco if can? Maybe we can learn something from each other. 7066760284 or if yiu guve me your number, I can call you. Thank you.
  • batbeer2 2015-01-28 13:37
    Hi Tim, I believe it is possible to generate excess returns with technical analysis. It's just that anyone claiming it is easy is either lying or doesn't understand what it is really about. A friend of mine is a good (options) trader. If I had to hazard a guess he has an IQ well in excess of 155. The guy literally solves a 7 x 7 rubics cube blindfolded. He will gaze at it for 20 seconds and them proceed to solve it without looking at it again. That scares me. He is a very nice gu ...

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All batbeer2's Activities

  • batbeer2 commented on Mitchell Mauer's article 04-29 10:54
    Who Was Ben Graham?
    (This article appeared first on The Stock Market Blueprint Blog.) History has designated Benjamin Graham as the "father of value investing." He not...
    View all 1 comment
    batbeer2 04-29 11:54
    • >> Graham was the first to base investment decisions on companies’ financial statements....

      How do you know this?

       

       
  • batbeer2 commented on Vera's article 04-24 04:51
    New Feature Announcement: Warren Buffett’s Owner Earnings Per Share
    In the 1986 Berkshire Hathaway shareholder letter, Warren Buffett (Trades, Portfolio) defined owner earnings as follows: "These represent (a)...
    View all 1 comment
    batbeer2 04-24 05:51
    • Very interesting, thanks! 

      I think this might work for some companies and may be dangerous when used with others.

      Take Wanlmart. A huge part of its "capex" is the increase in inventory as it grows. Accountants will say inventory is a current asset. However, for a retailer (not in liquidation), inventory is very much a fixed asset. The retailer will forever have cans of soup sitting on its shelves. When they open new shops, someone will have to pay for the extra inventory. In my book that growth capex but under GAAP, accountants disagree. 

      Accountants can disagree but the reality is that the inventory in a given Walmart shop is worth more than the building.

      For this and other reasons, I suppose the above approach is best used on companies with very significant fixed assets to total assets. The formula will be less meaningful for a company like Car Mart with huge inventory relative to its fixed assets. Or a bank.

      Conversely, the results will be a bit more meaningful for a comapany with significant fixed assets to total assets. Union Pacific and electric utilities come to mind. 

      In practice I suggest adding a filter or perhaps warning sign for companies with relatively low fixed assets to total assets (banks and some retailers) when presenting the results for a given company.

      Just some thoughts.
  • batbeer2 commented on Mitchell Mauer's article 04-19 12:00
    Crossing Your Fingers: The Best Way to Identify Stocks With Competitive Advantages
    When selecting a long-term stock investment, most investors take a page out of Warren Buffett (Trades, Portfolio)’s playbook and look for companies...
    View all 5 comments
    batbeer2 04-19 13:00
    • >> The Wright Brothers and Henry Ford both did a pretty good job at that.

      Fair point! 

      Then again, Union Pacific was around before there were cars and I'd be willing to bet they will be around after the last "normal" car has been produced.

      In any case, I think it will be hard to go back to 1916 and pick a car stock or airline stock that has done better than Union Pacific over that timeframe. A moat does not mean no one will attack you. It just means you have a much better chance of standing your ground.

       
  • batbeer2 commented on Mitchell Mauer's article 04-18 23:22
    Crossing Your Fingers: The Best Way to Identify Stocks With Competitive Advantages
    When selecting a long-term stock investment, most investors take a page out of Warren Buffett (Trades, Portfolio)’s playbook and look for companies...
    View all 3 comments
    batbeer2 04-19 00:22
    • I did not list commodities, I listed companies. 

      Take POSCO. They rely on iron ore to produce steel. That ore is transported by very big boats. The competitve advantage is with the harbour. You see, Posco has their own (very deep!) harbor. 

      That harbour (then just a bay) in Pohang was selected by the US navy during the Korean war:

      1) To easily offload military equipmnet.

      2) To easily distibute said equipment accross the Korean peninsula. The terrain surrounding the harbor was uniquely qualified to do that. As such, the geography of in/around Pohang is unique. And POSCO owns it. 

      So tell me, how is a competitor going to replicate that?
  • batbeer2 commented on Mitchell Mauer's article 04-18 16:23
    Crossing Your Fingers: The Best Way to Identify Stocks With Competitive Advantages
    When selecting a long-term stock investment, most investors take a page out of Warren Buffett (Trades, Portfolio)’s playbook and look for companies...
    View all 1 comment
    batbeer2 04-18 17:23
    • Can you confidently predict which stocks will be the next Blockbuster and which will be the next Apple?

      No. But I will confidently predict that:

      - Trains will be the most efficient form of land transportation and there will not be a new major railroad in the US (UNP).

      - Lawyers will have a relatively high hourly rate and the courts will be as busy as ever. They will also be resistant to change (DJCO).

      - Iron ore will be required to produce steel and this ore will be transported in very large ocean-going carriers. These carriers will only be able to dock in deep harbors (POSCO). 

      - There will be a need for automated farming equipment and farmers will buy this equipment from a supplier with an effective and trusted local maintenance network (LNN).

      - More carbon fiber (not aluminun) will be used to construct passenger aircraft and for that reason more fasteners and structural castings will need to be made from titanium. This requires special tooling and skills (PCP).

      - It will require a lot of paperwork to distribute small quantities of chemicals on a global scale. In addition, research chemists will have a relativey high hourly rate and not like to waste hours finding an alternative (perhaps cheaper) source for a given rare chemical (Sigma Aldrich).

      In short, the fact that one disaster and one success were hard to predict is not a reasonable way to make the point that it is impossible to correctly identify a competitive advantage.
  • batbeer2 commented on Chris Gilbert's article 04-18 15:18
    Key Metrics: Retained Earnings to Market Value
    Introducing the key metrics series, we take a look at retained earnings to market value. I want to explain exactly what retained earnings are, what...
    View all 1 comment
    batbeer2 04-18 16:18
    • Thanks for the article about an IMHO very important subject.

      Buffett talks about how earnings should be retained if and only if those earnings generate incremental value within the company. You quantify this by dividing stock appreciation by incremental retained earnings.

      In my view this is as logical as it is dumb.

      Practically speaking, the result of your calculation will very obviously favor popular/overpriced stocks. What's more, it will handicap beaten down stocks. IMHO anyone trying to correctly identify bargains should avoid a formula that favors expensive stocks. And that is what your formula does.

      Philosophically speaking, value is what you get and price is what you pay. In value investing you should never confuse those two.

      I suggest you use incremental annual earnings as a proxy for value. A company that generates $50m of incremental annual earnings after retaining $100m worth of cumulative earnings is very obviously doing something right (regardless of the stock price).

      FWIW I personally look at "cash from financing" to perform a similar test. Anytime you see a company with negative cash from financing that has also been able to grow, then there is nu argument. That is a fantastic franchise. It returns cash as it grows. Any other business is not as good.

      Apple passes that test, as do Costco, Amex, Union Pacific, C.H. Robinson and Phillips 66. They are all fantastic according to my quick test. You'll note they are not all equally expensive.
  • batbeer2 uploaded a new picture 04-22 11:42
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