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David Chulak
David Chulak
Articles (77) 

One Person’s Trash Is Another’s Treasure

June 21, 2013 | About:

About the author:

David Chulak
David Chulak is a private investor that uses a value approach to investing in the styles of Graham & Dodd and Warren Buffet. Looks for that margin of safety in an effort to preserve capital and attempts to guard against short term market fluctuations by having clear rules laid down in advance for selling an equity. Likes to visit the company's where his investments are in order to understand the business better.

Rating: 3.6/5 (8 votes)

Comments

agaglio
Agaglio - 2 years ago
It seems that, in the case of a short seller, one ought to provide the bull argument in an attempt to 'kill' the short thesis. What is the bull argument here? Surely if Marks, Dalio, and Grantham are on the long side it's not trivial!
batbeer2
Batbeer2 premium member - 2 years ago
Thanks for sharing your thoughts.

A tip:

"I" is the sixth most used word in this article. It's a tie along with "it", "is" and "for".

"VALE" or "company" don't make the top 30.

http://www.wordcounter.com/cgi-bin/result.cgi

vivekjain57
Vivekjain57 - 2 years ago
I think you realy need to consider the time horizon.....it may work to short vale for a quick trade with the reasons you cited and Chanos and Einhorn are more traders than long term investors. Chanos even shorted Hpq and it initialy fell down a cliff but later recovered. Long term it should come back. At the current price and valuation I am definetely long Vale.
davidchulak
Davidchulak premium member - 2 years ago
Agaglio,

My intent...which may have not come across, was only to demonstrate that investors should look at both sides....long and short to get a better understanding of the stock. Could I have provided a long or bull argument? Yes, and perhaps I should have, though I wouldn't even try to speak for the likes of Grantham, Marks and Dalio. Sorry that I disappointed on that. I'll keep that in mind on future articles. Thanks for the comment.

Batbeer,

I just used "I" several more times in my reponse to Agaglio. Actually, thanks for that. Anything that helps me to become a better writer is always useful. I love your comments and wish I would see you write more. Thanks for the tip.....I did it again!!!

Vivekjain,

Excellent comment. Chanos believes that Vale is a value trap, but I can't go that far. I (darn you Batbeer!!) saw an opportunity due to several factors and took advantage in this short term situation. Not my normal style of investment, but after becoming convinced, had to take advantage of the opportunity. These are extraordinary times of investing. Mostly, I am a pretty boring investor...long KO, PFE, INTC and several others.

Thanks for the input to all.
w1omega
W1omega - 2 years ago
Interesting. Prem Watsa also sorta hinted a collapse in commodity is coming, though his reasoning was vague....he thinks commodity is being horded by speculators, which makes it difficult to analyze.

I'm curious. You said India and China's "_supplies are stockpiling." To what were you referring to?

Enjoyed reading about Glenn Greenberg.
davidchulak
Davidchulak premium member - 2 years ago
W1omega,

I was referring to a combination of reporting by various sources.

Einhorn stated in his short thesis that commodities had basically run their nearly 10 year course or bull market (my words) and that supply was now exceeding demand. In fact, he goes on to explain how the mining company's have spent billions to attain more supply, while the demand was already slowing down.

Chanos makes the argument that the entire industry is overvalued and in particular, Vale is extremely dependent on China which is 1) slowing down and 2) creating their own plants.

Vale has also had many write downs that have not turned out the best, especially under the old CEO. This is still creating a drag on the company.

http://businesstoday.intoday.in/story/slowing-demand-to-keep-iron-ore-prices-under-pressure/1/194380.html

We believe domestic iron ore prices will remain weak and may decline by 5-7% by the end of 2013. Also, small players will continue to remain shut.

TARANG BHANUSHALI

Associate Vice President, Research, India Infoline

Actually many sources are available, but let me know if you want more. And thanks for reading!!

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