Hottest Links: Greats, Frauds, Bubbles, Net-Nets, BBRY, JCP & GS

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Hottest links for Sunday September 29th, 2013 (see prior edition of hottest links here). We are now back on regular schedule and hope to have hottest links six times a week for the foreseeable future. Make sure to sign up by email and never miss a single edition here.

Top stories for today (as well as the past few days we missed…) include; Great article on Mohnish Pabrai and his experience investing in Japanese net-nets, the question is why did he not make a fortune from this classic Ben Graham investment idea? Lots of good info/data on some famous investors and some advice on how investors can learn from the greats like Ben Graham, Walter schloss and others; Two great articles on auditing and fraud from John Hempton, Matt Levine and Francine McKenna; Everyone loves to watch for the next bubble, but how (if possible) can one avoid investing in the next big thing about to burst? Value analysis of this tiny microcap air service provider stock;  A look at Brazil Fast Food Corp. (OTCMKTS:BOBS), which might be going private; An-in depth look of what went wrong at BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB); That and much more in today’s hottest links.

Hottest Links: Greats, Frauds, Bubbles, Net-Nets, BBRY, JCP & GS

Hottest Links: Value Investing

How Did Mohnish Pabrai Not Make Money in Japanese Net-Nets?

I can’t explain Pabrai’s experience with Japanese net-nets. But I can tell you a little about my own. Here are the returns (in Yen) of some Japanese net-nets since March 21st, 2011. ZAOH COMPANY, LTD. (TYO:9986): 84%, FUJI ELECTRIC INDUSTRY CO., LTD. (TYO:6654): 23%, Mitsui Knowledge Industry Co Ltd (TYO:2665): 28%, ASICS Trading Co.,Ltd. (TYO:9814): 82%, SONTON FOOD INDUSTRY CO., LTD. (TYO:2898): 47% TAKEOVER, Nisshin Electronics Service Company Ltd. (TYO:4713): 33% and DAITO GYORUI CO., LTD. (TYO:8044): 9%. [Geoff Gannon, Gannon and Haong on Investing]

The Best Way to Improve Investment Skills

Studying what Henry Singleton did at Teledyne Technologies Incorporated (NYSE:TDY) gives us a blueprint for successful capital allocation strategies… Eddie Lampert gave us a similar blueprint at AutoZone, Inc. (NYSE:AZO). Studying Schloss’ investment in the Penn Central bonds gives us a blueprint for all the great things that can happen by simply buying things cheap: A “dollar for 40 cents”… Buffett’s investment in See’s Candy (or his most famous investment of all: The Coca-Cola Company (NYSE:KO))….. [John Huber, Base Hit Investing]

Tiny Deep Value Illiquid OTC Listed

Great Lakes Aviation, Ltd. (OTCMKTS:GLUX) is a leading scheduled air service provider to rural communities in the Western US.  Incorporated in 1979 operating as an independent carrier and as a code share partner with United Air Lines, Inc. and Frontier Airlines, Inc. [Shadow Stocks]

BOBS Insiders Ridiculous Offer To Take The Company Private

Brazil Fast Food Corp. (OTCMKTS:BOBS) (the “Company”), the second largest fast-food restaurant chain in Brazil with 1,057 points of sale, today announced its entry into a definitive merger agreement pursuant to which Ricardo Figueiredo Bomeny, its CEO….. [Jason Rivera, Value Investing Journey]

Tesco Shares

In 2012 Tesco PLC announced its first profit warning in 20 years.  Immediately, Tesco PLC (OTCMKTS:TSCDY) (LON:TSCO)’s shares fell off a cliff.  The Sun newspaper said it all: “Tesco profits warning wipes £4.3bn off company”.  The question is, were those investors right to sell? [John Kingham, UK Value Investor]

How To Avoid The Next Bubble

In the experiment, Caltech students had their brains scanned while they viewed a stock being traded in a laboratory game. In that experimental market, the fundamental value of the stock was based on its payments of dividend income and declined almost to zero by the last round. [Jason Zweig, The Wall Street Journal]


Reporters Caught Not Fact-Checking Private Company Numbers

As a CPA and former internal auditor I’m used to backing up my analytical conclusions or statements of “facts” with sufficient evidence. I was glad to see Forbes would not allow me to make a mistake. The worst offenders recently were those that wrote about Facebook Inc (NASDAQ:FB), pre-IPO, and Groupon Inc (NASDAQ:GRPN). [Francine McKenna, re: The Auditors]

The Fraudsters Have A Better Business Model

Today the SEC settled fraud charges against directors of Universal Travel Group (OTCMKTS:UTRA). The details are amusing… The Commission alleges that UTG, Jiang and Xie failed to disclose cash transfers of approximately $41 million to thirty-four unknown entities in Hong Kong and China between September 2008 and March 2011. The transferred cash derived from private and public stock offerings in the U.S., and UTG claims it was returned to Chinese accounts of its subsidiaries as part of a currency exchange. [John Hempton, Bronte Capital]

OK, You Steal the Money, I’ll Steal the College

Chinacast Education Corporation (OTCMKTS:CAST) is, or was, “a leading post-secondary education and e-Learning services provider in China” run by Chan Tze Ngon and Jiang Xiangyuan. It went public in the U.S. in 2006 (by means of a merger with a blank check IPO company, always a bad sign), and was listed on Nasdaq, under the symbol CAST, from 2007 until 2012, when it was de-listed for being very very tiny and very very terrible.  [Matt Levine, Bloomberg]

Goldman Warns of J.C. Penney Ch 11, Underwrites Equity, Issues Neutral Note

This is not fraud in anyway, but this is questionable IMHO and leaves more questions left then answered. What is going on between J.C. Penney Company, Inc. (NYSE:JCP) and Goldman Sachs Group Inc (NYSE:GS)? [ValueWalk]

Great investors/ Entrepreneurs 

The Greatest Moneymaking Machine In History

Stanley Druckenmiller may be the greatest moneymaking machine in history. He has Jim Roger’s analytical ability, George Soros’s trading ability, and the stomach of a riverboat gambler when it comes to placing his bets. His lack of volatility is unbelievable. I think he’s had something like five down quarters in 25 years and never a down year. The Quantum record from 1989 to 2000 is really his. The assets grew from $1 billion to $20 billion over that time and the performance never suffered. [Ivanhoff, ST50]

A Dozen Things John Bogle About Investing

“In many areas of the market, there will be a loser for every winner so, on average, investors will get the return of that market less fees.”  The mathematics of what he describes is inescapable. Costs and expenses are a huge drag on investing performance. [Tren Griffin, 25iq]

Book review: “My years with General Motors”

Alfred P. Sloan was the CEO and later Chairman of General Motors Company (NYSE:GM) for 35 years from around 1920 to 1955. My years with General Motors contains his memoirs about this time and was released in 1964. [ValueAndOpportunity]

Book Review: The Manual of Ideas

John Mihaljevic, Managing Editor of The Manual of Ideas, recently published a book also named The Manual of Ideas.  As opposed to being a manual of potential investment ideas, the book provides insight into the process Mr. Mihaljevic uses to identify compelling opportunities. [The Rational Walk]

5 Tips to Present Like Steve Jobs

Julien Smith watched some old Steve Jobs presentations and came away with some tips. [Shane Parrish, Farnam Street]

How Does a 2000 Year Old Asset Allocation Strategy Perform?

Add assets that should pay you cash flows, and do so in different environments.  We did a few posts on this already, and I added a new one after reading the new edition of Gibson’s Asset Allocation book. [Mebane Faber]


Late last year, Research In Motion Ltd. chief executive officer Thorsten Heins sat down with the board of directors at the company’s Waterloo, Ont. [Sean Silcoff, Jacquie Mcnish And Steve Ladurantaye, The Globe and Mail]

Homo Economicus versus Homo Sapiens

Dick Thaler and Cass Sustein in their NY TIMES bestseller, NUDGE, describe two people in the world: Econs and Humans, also known as Homo Economicus and Homo Sapiens. I want to make the case that all *humans* should utilize systematic decision-making processes. [Wesley R. Gray, Turnkey Analyst]

Tapering, Market Overvaluation etc…

The market has been obsessed with tapering lately.  The Fed is buying $85 billion per month in bonds; that’s more than a trillion dollars a year!  If you told someone 10 or 20 years ago that this would be happening, they would guess that gold would be going parabolic.  But it’s not. [The Brooklyn Investor]

Asset Allocation for the Value Investor

If you buy a great asset for a price far above its real or intrinsic value you might wait decades to get your money back (i.e. Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), Cisco Systems, Inc. (NASDAQ:CSCO) in 2000). These are outstanding companies who have produced earnings and grown dividends for  many years. [Ken Faulkenberry, The Arbor Investment Planner]

Hottest Links: Not The Onion

Study: Everyone hates environmentalists and feminists

Why don’t people behave in more environmentally friendly ways? New research presents one uncomfortable answer: They don’t want to be associated with environmentalists. [Tom Jacobs, Salon]

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