So, posting lately has been challenging as I have a new little one. I keep reading how writing regularly is essential to improving. I write frequently for my profession, however, drafting documents and memoranda aren’t really the same as putting together interesting blog posts. In order to try and write more regularly and hopefully churn out some decent content on this site (and create a diary of my own thoughts), I am going to start writing “I’m just saying” posts on like a weekly basis. For this one, I thought I would quickly run down an investment and briefly state why I am long. Continue reading “I’m just saying…”
Warren Buffett recently appeared on CNBC to announced the elevation of Ajit Jain and Greg Abel, both to vice chairmen of Berkshire Hathaway, setting them up as potential successors in the event of his eventual retirement. His appearance was interesting as always (with the exception of the awkward responses to the ideologically laced banter from Kernen). But the most interesting point to me, was his discussion of bonds. Continue reading “Resource Roundup: Multpl.com and some thoughts inspired by Buffett”
This is just a quick sort of diary/placeholder post that I will plan to go back and update a bit at some point in the future.
I am considering purchasing some Greenlight Reinsurance (GLRE). GLRE is David Einhorn’s Cayman/Irish domiciled reinsurance operation, which has an investment management agreement with his hedge fund. So basically it is a reinsurance operation with investments handled by Greenlight.
First, some quick reasons for my interest. GLRE is trading at ~15% discount to book. Einhorn has underperformed “the market” badly. He’s a value investor, so this is somewhat to be expected (the value premium has sucked wind for almost a decade). I personally think he is a legitimately skilled investor. Here is a recent video of his appearance for a Q&A session at the Oxford Union.
GLRE has just hired a new CEO (to run the reinsurance bidness); Simon Burton. Burton was with Steven Cohen’s reinsurance outfit until it was sold. More intriguingly to me, he was formerly an executive, eventually co-CEO, with Lancashire Holdings (with Richard Brindle). Lancashire has a history of fantastic underwriting results, especially before Brindle retired/left. Burton is sounding a little like Brindle/Lancashire; talking about making GLRE nimble and getting into some different, more transactional markets. He also seems to be offering a very sober appraisal of profitability on offer in the insurance markets currently.
Also, GLRE has a provision in the agreement with Greenlight, whereby GLRE pays “only” a 10% performance fee until GLRE earns back 150% of investment losses (Greenlight lost 20% in 2015). See, GLRE’s website or the most recent Q for more detail. Greenlight also gets a 1.5% annual management fee.
So those are some reasons to like it. Some negatives I note are: 1) Einhorn is getting divorced…could lead to lack of focus or depression or something (one reason I really prefer systematic/quant strategies to ad hoc managers); 2) high hedge fund fees (but a break is on offer until they get back above the high water mark); 3) Einhorn shorts…I don’t like shorting. It is a poor, asymmetrical bet in my mind and it is really hard (and can result in you losing 20% in 2015); 4) reinsurance is sloshing with capital and these hedge fund captives were a big part of the problem with a ton of capital deployed in the last five-ish years (I think Buffett has said they haven’t written any of certain lines in years because of crappy pricing and Brindle took his ball and went home too (now he has a new little “start up” but I think its more focused on asset management…waiting for the next decent market)); 5) GLRE underwriting record/insurance operation has kind of sucked so far leading to recent departure of CEO.
If any of you more knowledgeable/seasoned insurance investors have additional background information about Mr. Burton and his track record/impact at Lancashire, I would appreciate you sharing, perhaps by leaving some comments.
Well, my infant son is crying, so I’m off. Happy New Year!
I am going to try and regularly do a quick post on some nice online resources available for investors. The first of these is the asset allocation tool on the Research Affiliates website. Continue reading “Resource Roundup: Research Affiliates Asset Allocation Tool”
This will be a quick post. I wanted to suggest a few “year end” sort of personal finance moves for the more retail investor types among us.
First, you should max out your tax advantaged accounts. If you are unable to max them out for 2017, you should increase your contribution in the new year to move in that direction. In the future, I plan a post about why we should automate our savings. For now, pay yourself first by automatically saving. If you are not able to max out available tax advantaged accounts, consider increasing your contributions by 100% of any raises you receive (50% if you are particularly strapped for cash). I will leave the Roth versus Traditional analysis for your consideration. Go to the MadFientist blog for more information to be used in making your decision.
Second, you should consider buying $10,000 (or whatever you desire your bond allocation for this year to be) in U.S. Treasury Series I savings bonds (“I Bonds”). There are compelling reasons why investors should purchase zero additional bonds until they have purchased all of the I Bonds the U.S. allows each year. Continue reading “Year End Moves: I Bonds”
Just a quick post to record my thoughts for future evaluation. I purchased WisdomTree (WETF) earlier this year for ~$9 per share. I am going to sell 2/3 of the position @ ~$12 and just let the 33% profit run (in a tax deferred account, or I would not bother). The basic evaluation when I bought was that I liked the business, insiders/founders are in control (reducing principal-agent conflicts), and it was trading with an enterprise value of around 2% of AUM. Continue reading “WETF Update: Winter (Vanguard) is Coming!”
I will discuss fundamental investing on this site, so I can chronicle some of my adventures in stock picking. The vast majority of my marketable securities portfolio (modest though it is) is indexed. The majority of that money is in market capitalization weighted index funds (in retirement vehicles).
Yet, I am convinced of the merits of value investing and the persistence of the value factor. I will plan to post more on this in the future, with some links to better sources than this blog. If you can’t wait, you might go ahead start perusing:
The gap between value stocks and the market cap weighted indexes in foreign funds is larger than in the US and seems historically large. These markets also appear to be cheap relative to history and the U.S. Many would point out this is probably because these indexes are more heavily weighted to financial, mining and energy companies (which may all be facing obsolescence, or at least decreased margins due to US fracking and other technological advances) and the indexes are devoid of FAANGS/tech darlings.
I acknowledge these risks, but that is life as a value investor. As Joel Greenblatt of Gotham Asset Management says, “buy it cheap and something good might happen.” An example of this is what happened with U.S. banks over the last several years. They were cheap for good reason: they were going to be regulated into oblivion, rates would never move, and they would never earn their cost of capital. The narrative has since changed and the stocks have roared back.
I am also primarily exposed to U.S. assets, so foreign stocks should provide me with (modest) diversification benefits. So, I have decided to allocate some additional money to foreign value funds. As part of this process, I have been comparing some of the available foreign value ETFs. Continue reading “Best Foreign Value Factor ETFs”
Welcome to the Corpraider Blog. I am not an actual “Corporate Raider” or activist investor. I am, however, aware of principal-agent problems that investors in publicly traded companies face. I attempt to minimize these problems in my investments (I also grew up in the 80’s).
I plan to use this site to create a record of my thoughts, primarily, about investing and personal finance (mostly for my future evaluation). I also hope the record I create will allow me to “compound” some knowledge over time. I will also try to compile links to blogs and other resources which I find informative and relevant. I hope that you will find the information here useful and perhaps even entertaining!