Top stories for today (and Saturday) include; Beware of mistaking cause and symptom, a behavioral finance approach to the financial crisis and recent events; A look at a stock which is trading at less than its NCAV and could be a double bagger; What is the best protection against bad trading decisions? There are a million articles about
Tweeter Twerking and twitter, but the only one you need to read is just out from Aswath Damodaran on putting the numbers together from a value investor’s perspective; Contrary to MANY eyewitness accounts I have received the FT reports that Dan Loeb is a nice guy in person (this should be not the onion or actually The Onion, but we have another article about this); If your dog eats your bitcoins good luck getting them back, but you can receive your T-bills….. That and much more in today’s edition of hottest links.
Hottest Links: Stories
A Greatly Improved Company Selling Below NCAV
The report discusses FIRST AVIATION SVCS (OTCMKTS:FAVS)’ Book Value, which he believes is perhaps double its current share price of $9.49, or more. (BV is conservatively around $20.) [Jason Rivera, Value Investing Journey]
Best Protection Against Emotional Decision-Making
Value investors know that emotion is the enemy of rational investment decisions and, hence, success in investing. Yet, what is less well known is how investors can protect themselves from their own emotions. After all, simply striving to be unemotional doesn’t work. [Oliver Mihaljevic, BeyondProxy]
Beware of Mistaking a Symptom for the Cause
In Fooled by Randomness, Nassim Nicholas Taleb taught us that often what seems a tight connection is merely coincidental, with the randomness mislabeled until it’s too late. Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) wasn’t even the first casualty of the financial crisis (Northern Rock fell before Bear Stearns), so how could it possibly be the cause? The placement of Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) into conservatorship, the government and Federal Reserve Bank’s intervention in American International Group Inc (NYSE:AIG), Merrill Lynch’s sale to Bank of America Corp (NYSE:BAC) …. [RGA Investment Advisors]
Why Would An Enterprising Investor Hold Cash Today?
Some of us are old enough to remember when interest rates were high. Some of us are even old enough to remember when interest rates were low – before they were high. [Frank Martin, Martin Capital]
Companies Discussed In The Investment Ideas Forum
Above are a collection of 85 companies recently discussed in the investment ideas forum and suggestions from board members. Each member gets 5 votes. Choose the companies you believe will have the best total return. The 15 companies (cash is an included asset class) with the most votes will be bought in the portfolio (balance stands at $1,067,000). Allocation will be determined by the number of votes each company receives.
The portfolio will be public for anyone to see at the following link: docs.google
Perhaps time for a bump here, 172 board members voted at the beginning of Q3, ref. here. Right now 67 board members have voted, and only few days left before the poll closes. [CornerOfBerkshireAndFairfax]
Twitter announces IPO: The Valuation
Based on prior transactions in the company (VC infusions and acquisitions) and the multiples of revenues/users for other companies in the space (the social media medley, as I called it), I argued that Twitter would be priced at about $12 billion by the bankers. [Aswath Damodaran]
Twitter Close to Picking High-Profile Head of News
Twitter, which made some sort of financial news yesterday, is close to tapping a person to become its head of news, according to sources close to the search. [Kara Swisher and Mike Isaac, AllThingsD]
Email, Undisclosed In Sac Trader’s Case
How to Look Under a Hedge Fund’s Hood
If you meet the income or asset minimums required to invest, hedge funds can be a good way to diversify your portfolio and achieve impressive risk-adjusted rates of return. [Julie Steinberg, The Wall Street Journal]
Dan Loeb’s doomed Sotheby’s campaign
Loeb filed his broadside against the auction house, where he said that he holds a 9.3% stake, and called for the resignation of Bill Ruprecht, its chairman and CEO. It’s worth comparing Loeb’s letter to Sothebys (NYSE:BID) with his May letter to Sony Corporation (NYSE:SNE) (TYO:6758), or his September 2011 letter to Yahoo! Inc. (NASDAQ:YHOO). [Felix Salmon, Reuters]
Current SEC Priorities Regarding Hedge Fund Managers
This is truly an opportune time to examine the regulatory landscape for hedge funds and their advisers— [Noam Noked, Harvard.edu]
Dan Loeb Only Comes Off Like A Condescending A-hole On Paper
Mr Loeb’s latest target, William Ruprecht, chief executive of Sothebys (NYSE:BID), was this week given characteristic treatment. “We acknowledge that Sotheby’s is a luxury brand, but there appears to be some confusion – this does not entitle senior management to live a life of luxury at the expense of shareholders,” he wrote in a letter dispatched on Wednesday. [Bess Levin, DealBreaker]
Abusive Trading Patterns Involve Multiple Exchanges
The self-funded Financial Industry Regulatory Authority (FINRA) monitors about 80 percent of U.S. equity trading activity through its Order Audit Trail System, or OATS. The watchdog began running the surveillance of cross-market trading activity in August 2012. [Herbert Lash, Reuters]
SEC to Devote New Website to HFT
In an effort to regulate high frequency trading and maintain transparency, the Securities and Exchange Commission is planning to launch a new website where it will publish data and research on HFT. [Floating Path]
Goldman Sachs’ Warehouse Trade–Conspiracy Theory!
Our story begins back in 2003, when the Fed allowed regulated banks to trade physical commodities, unleashing a decade of increased bank activity and revenues in the commodity sector. Goldman Sachs Group Inc (NYSE:GS) was considered a top commodity bank, and grew commodity revenues to over $3 billion by 2007. [David Foulke, Turnkey Analyst]
Boiler Room Diaspora
Starting a cold-calling brokerage firm used to be easy – all you needed was the Lehman telemarketing script, a b-d license and a room full of testosterone-poisoned young men from Long Island or the outer boroughs of New York City that you could manipulate…. [Joshua M Brown, The Reformed Broker]
Asset Allocation, Misc, Charts
Personal Capital: We’re Hiring 100 New Advisors
The online money management business model shifts towards a hybrid model. [Charles Paikert, Financial Planning]
Ned Davis: Downbeat 2014 For China, Commodities; Gold Supercycle Dead?
Many are pessimistic about China’s GDP growth next year and commodities. At recent check, SPDR Gold Trust (ETF) (NYSEARCA:GLD) and iShares Gold Trust(ETF) (NYSEARCA:IAU) were both headed lower. [Teresa Rivas, Barron’s]
I have always been interested in the power of data visualization. Readers of my research puzzle pix blog know that I try to come up with unique ways of displaying the movement of investment variables over time, although I really only use one type of chart — line graphs with time shown
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