Hottest links for Thursday, March 27th, the late edition. Get our free daily newsletter and never miss a single linkfest. Also, now if you sign up you will get our new e-book on value investing.

Top stories for today are included below.  This afternoon, we’ve got some very interesting and compelling stories, including some not-so-great news coming out of Vetropack’s just-released numbers, an analysis of Buffett’s annual letter to shareholders which is positively positive on Berkshire Hathaway, and a bold (and somewhat alarming) statement that when it comes to tech IPOs, profits don’t matter.

Hottest Links: Stories

Value Investing

Why Value Investing is So Hard (Russian Edition)

A basic, “explain to your 12 year old niece reason why it works”.  Value investing, at its most basic, is buying $1 for $.80 (or less than intrinsic value).  Most of the alpha out there (or smart beta or whatever it is being called these days) is either hard to find or hard to DO. [Meb Faber]

Buffett the Market Timer? Part 2 and Part 3

The first time I notice common stocks mentioned in the Berkshire Hathaway letter to shareholders is in 1966 (the earliest I have is 1965 from Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B): Letter to Shareholders 1965-2012). This, by the way, is before the insurance acquisition.  The letters from 1965 to 1969 are signed by Kenneth V. Chace, President of BRK, but actually written by Buffett. [KK, The Brooklyn Investor] Buffett talks about trying to find whole businesses to buy but sees better opportunities in the stock market: Currently, we find values most easily obtained through the open-market purchase of fractional positions in companies with excellent business franchises and competent, honest managements. [KK, The Brooklyn Investor]

Governance & Culture: Munger, Peter Thiel & Netflix Combined

Combining Munger takes on Governance, Peter Thiel’s insights and Netflix, Inc. (NASDAQ:NFLX) HR presentation was fun to delve into intelligent governance frameworks sourced from an equity investor, a venture capitalist and a company. So, what are them? [Tropical Value Investing]

Thoughts on Warren Buffett’s 2013 Shareholder Letter

The writing on the wall doesn’t get any clearer than this. Buffett thinks that Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is worth much, much more than book value and he will be aggressive at buying back stock at the 120% level from any shareholder willing to sell.  This is interesting because BRK is selling at 131% of book value. [Kevin Graham, Canadian Value Investing]

Investing in the Unknown and Unknowable

Central concepts in decision analysis, game theory, and behavioral decision are deployed alongside real investment decisions to unearth successful investment strategies. [Cullen Roche, Pragmatic Capitalism]

You need an investing system

Investors seem to have an intrinsic drive to classify themselves.  People will say something like “I’m a mix of Graham and Buffett with a dash of Rockefeller and the temper of Carnegie.”  Sometimes these classifications border on ridiculous, other times confusing. [Nate Tobik, Oddball Stocks]

Funds

Update: Vetropack (CH0006227612)

Vetropack Holding AG (SWX:VETE) just released 2013 numbers and the annual report yesterday. All in all, things don’t look so great. Sales increased 2%, however EBIT margins declined and net income declined significantly as the one-off gain from a property sale in 2012 could not be repeated. [Memyselfandi007, Value And Opportunity]

Hottest Links

“Earnings drive the market” LOL

Ryan Detrick (Schaeffers) drops a vicious guest post at See It Market in which he debunks six popular trading myths. Here’s one of my personal favorites, the idea that earnings growth during any given year has any correlation with stock market performance… [Joshua M Brown, The Reformed Broker]

Hottest Links

Schwab: survey finds retail investors grow more bearish

It appears that retail investors, just like their professional colleagues, are turning more bearish on U.S. stocks. Charles Schwab Corp (NYSE:SCHW)’s most recent sentiment survey showed bearishness among retail investors rose to 20%, up from 10% in December of 2013. [Anora Mahmudova, The Tell]

Tech IPOs: Profits don’t matter

Today, a different company came to market, armed with $568 million in 2013 profits on $1.8 billion in revenue. That would be King Digital (KING), maker of highly-addictive mobile games like Candy Crush Saga. It managed to price its shares at $22.50 (middle of its proposed range), giving it an initial market cap just north of $7 billion. [Dan Primack, Term Sheet]

The reluctant portfolio manager

You are charged with investing other people’s money in a set of assets that you think is overpriced.  What do you do? Unless you work at one of the rather small number of asset managers that has defined itself as being willing to let cash build if the opportunity set is unattractive (and taking the business risk that comes along with it), you put the money to work. [Tom Brakke, The Research Puzzle Pieces]

Hottest Links: Not the Onion

Russia Hires Goldman As Corporate Broker To Boost Image

The bank has signed a three-year agreement with the Economy Ministry and the Russian Direct Investment Fund to advise on issues such as communicating government decisions and setting up meetings with investors, according to Sergei Arsenyev, Goldman Sachs’s managing director of investment banking in Moscow. [Jason Corcoran, Bloomberg]