Buffett is my guy. No doubt about it.
I like the concentrated portfolio.
I like the fact that his most important piece of advice is “don’t lose money”.
And I like his concept of “Mr. Market” being an individual who is some days happy and some days depressed (although I suppose that idea is directly from Benjamin Graham).
But I have to admit that I think Seth Klarman is basically on par with Warren when it comes to providing a blueprint for investment success that an investor should follow.
Klarman’s book “Margin of Safety” is likely the best source of an investment education that an equity investor can find. His annual letters which make it out to the internet are excellent as well. This year’s version was one that I should really read every single morning before setting out on the hunt for undervalued securities. Drilling his words of wisdom into my head every day would greatly reduce my error rate. No question.
In recent weeks I’ve been following a US listed Chinese company called China MediaExpress (CCME, Financial). As you may have guessed I’ve been following it because of attention that it has received thanks to a short seller (or at least perceived to be short seller) who has accused the company of some inappropriate conduct.
To dig a little more into the details I ventured to various stock message boards to see what I could uncover. On those boards I was shocked to find an abundance of shareholders who seemed to think that the details that this short seller (called Muddy Waters Research) had released were 100% poppycock.
It has been my experience over the past 15 years that when there is some questionable issues raised around a company that your best move is to get out first and ask questions later. I’m not sure I can recall a single instance where inappropriate conduct questions come up around a small company that end well for shareholders.
When that company is also a US listed Chinese company I like shareholders chances quite a bit less.
Klarman provided some interesting comments on short sellers in his 2010 letter to investors:
“From our experience, much long-oriented analysis is simplistic, highly optimistic, and sloppy. Short-sellers, by going against the long-term tide of economic growth and the short-term swells of public opinion and margins calls, are forced to be crackerjack analysts. Their work product is usually top-notch and needs to be. Short-sellers shouldn't be reviled or banned; most should be celebrated and encouraged. They are the policemen of the financial markets, identifying frauds and cautioning against bubbles. In effect, they protect the unsophisticated from predatory schemes that regulators and enforcement agencies don't seem able to prevent.”
And in the case of China MediaExpress it appears that once again, where there is smoke there is fire. Amazingly as I was writing this article the company has announced that its CFO and its auditor have both resigned today.
Finding fraud in a US listed Chinese company isn’t all that surprising. This one was a little different though at they used well known auditors in Deloitte and Touche and had a well known investor in CV Starr and Co. the investment vehicle of former AIG CEO Hank Greenberg.
Next time I see Muddy Waters blowing the whistle on a US listed Chinese company I may just throw a few dollars in with the short selling bunch. They are two for two so far.
I like the concentrated portfolio.
I like the fact that his most important piece of advice is “don’t lose money”.
And I like his concept of “Mr. Market” being an individual who is some days happy and some days depressed (although I suppose that idea is directly from Benjamin Graham).
But I have to admit that I think Seth Klarman is basically on par with Warren when it comes to providing a blueprint for investment success that an investor should follow.
Klarman’s book “Margin of Safety” is likely the best source of an investment education that an equity investor can find. His annual letters which make it out to the internet are excellent as well. This year’s version was one that I should really read every single morning before setting out on the hunt for undervalued securities. Drilling his words of wisdom into my head every day would greatly reduce my error rate. No question.
In recent weeks I’ve been following a US listed Chinese company called China MediaExpress (CCME, Financial). As you may have guessed I’ve been following it because of attention that it has received thanks to a short seller (or at least perceived to be short seller) who has accused the company of some inappropriate conduct.
To dig a little more into the details I ventured to various stock message boards to see what I could uncover. On those boards I was shocked to find an abundance of shareholders who seemed to think that the details that this short seller (called Muddy Waters Research) had released were 100% poppycock.
It has been my experience over the past 15 years that when there is some questionable issues raised around a company that your best move is to get out first and ask questions later. I’m not sure I can recall a single instance where inappropriate conduct questions come up around a small company that end well for shareholders.
When that company is also a US listed Chinese company I like shareholders chances quite a bit less.
Klarman provided some interesting comments on short sellers in his 2010 letter to investors:
“From our experience, much long-oriented analysis is simplistic, highly optimistic, and sloppy. Short-sellers, by going against the long-term tide of economic growth and the short-term swells of public opinion and margins calls, are forced to be crackerjack analysts. Their work product is usually top-notch and needs to be. Short-sellers shouldn't be reviled or banned; most should be celebrated and encouraged. They are the policemen of the financial markets, identifying frauds and cautioning against bubbles. In effect, they protect the unsophisticated from predatory schemes that regulators and enforcement agencies don't seem able to prevent.”
And in the case of China MediaExpress it appears that once again, where there is smoke there is fire. Amazingly as I was writing this article the company has announced that its CFO and its auditor have both resigned today.
Finding fraud in a US listed Chinese company isn’t all that surprising. This one was a little different though at they used well known auditors in Deloitte and Touche and had a well known investor in CV Starr and Co. the investment vehicle of former AIG CEO Hank Greenberg.
Next time I see Muddy Waters blowing the whistle on a US listed Chinese company I may just throw a few dollars in with the short selling bunch. They are two for two so far.
