Year: 2015

Shoulders of Giants -Brian Bares Interview

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Before today, I never heard the name Brian Bares even though I follow value investing world closely. I came across this interview and thought it’s definitely worth sharing.

Brian  Bares is the founder and CIO of Bares Capital Investment, a Austin based small/micro cap focused value money manager. He studied math and worked for a quantitative value investing shop before he started his own fund in 2000.

I’m impressed by his clear reasoning when addressing questions and the differentiating position he set for the firm by specializing in concentrated small/micro cap strategies.

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What do you need to know about Internet Finance in China

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You’ve heard “Internet Finance” is booming in China, but what exactly is it? It all began from the inception of Alibaba’s Yu’E Bao (literally means balance treasure) in 2013. Metaphorically speaking, it’s like your Paypal account balance which is as liquid as your checking account, but EBay is paying you 5% interest yearly. Wait, what?! I know what you are thinking, no, I did NOT miss a decimal point. Since I was away from the country for years, I haven’t really paid close attention to this business model until recently.

It was about two months ago, one family friend from China asked me about investing in real estate in US. A REIT name – Inland Real Estate Corporation [NYSE: IRC] looked very attractive to me then and I recommended it to him (see my older post here). The company then hit the 52 week low at around $8 with yield of 6~% and FFO multiple of 8, and seems to be oversold compared to its still solid property portfolio and operation. As we are speaking now, it was announced to be bought private by DRA Advisor in a $2.3 million deal, paying $10.6 per share. However, my friend decided to pass on this would-be 20+% in two months opportunity because he wasn’t interested in investing in a non-principal-guaranteed asset for 6% yield. “I’d better off put my money in my XX Bao, which gives me up to 10%.” he said. Well, that is very impressive, especially they “guarantee” principal, so basically making it a “risk free” investment. I then asked two question: who are they, and what type of asset they have to invest in to give you that return? “I don’t know, why do I care when they guarantee my principal?” replied my friend.

After some research, I think I find some clue.

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[Pinned Post] Who’s Who – Behind VIC Anonymous Users

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[Latest update: 8/13/2019, please go to the bottom to see new additions]

Value Investors Club (VIC), founded by the legendary investor Joel Greenblatt, is an anonymous elite value investing club whose admission is said to be very selective. According to John Petry, the co-founder of the club, there’s “a lot of very well known money managers” and “very, very successful hedge fund managers” who all use the site. However, from traits left by these “anonymous” users, we may be able to tell these well known and successful investors. I firstly carried out some of these researches purely out of my curiosity, but later found identifying these great investors helps me focus on quality ideas and discussions. Sometime I cannot tell who exactly they are, but certainly can tell the ideas were from some greatest minds. By all means, these guys’ writings are great stuff to read regardless who’s behind.

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Shoulders of Giants – Jeremy Siegel’s Outlook for Stock and Bond Returns 2015

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Jeremy Siegel, best known as “Wizard of Wharton”, gave a presentation about his outlook for stock and bond return on 11/18/2015. You can see the full replay from following link:

http://livestream.com/livecfa/Siegel15

As a finance historian, Siegel’s predictions are sometimes “right on” based on his observation on long period of time. A famous ancient Chinese saying says “Take history as a mirror and you will know the rises and falls.“. A western equivalent is Victor Hugo famous quote: “What is history? An echo of the past in the future, a reflex from the future on the past.” For the respect of history, I listen to Siegel closely.

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Shoulders of Giants – Dealbook Conference 2015’s Interviews with Stan Druckenmiller & Carl Icahn

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Thanks to Dealbook Conference, we could listen to ideas of the most influential leaders in their own area about the theme this year “PLAYING FOR THE LONG TERM”. Guests include Al Gore, Peter Thiel, Reed Hastings, Gary Cohen, Larry Fink & James Gorman, etc. What attracts me the most are the interviews with legendary investors like Stan Drunkenmiller and Carl Icahn.

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REITs （房地产投资信托）简介

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This is an article I wrote in Chinese for introducing REITs investing to retail investors. I had a friend of a family member asking about income assets. I provided this as an educational piece and recommended IRC who yields 6~% and has 8~ FFO multiple currently.

If you can read Chinese, keep reading.

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Strange Price Pattern of KLXI on 9/8/2015

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I noticed stock KLXI had a very strange price chart today, see below chart.

There are two abnormal observations:

  1. There were some block activities around 10:40 AM
  2. After that, the price hovered over very tightly around $39 for almost the rest of the day

KLXI_20150908

Such a straight line pattern usually can happens in short period, where a big buyer or seller had a large order placed at a limit price, absorbing all the liquidity on the other side when the price is coming into that person. In KLXI’s example, the stock went up from 38.5~ to 39~ in the first hour and seemed to hit a resistance level after the block/s. In other words, this pattern looks like a big seller sitting in a bull run, however I find it is very confusing. Nowadays, how could someone uses limit order in such a unsophisticated way? This is like shouting out to everyone else that I got a huge position to get out of.

I hope I could find something more from tick data.

Shoulders of Giants – Whitney Tilson’s lesson from World Acceptance Corp. Short

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Short ideas are harder to implement than longs, as you need to pay interests to maintain the position. On the other hand, market can stay wrong longer than you expect, causing both loss of the position and  shorting interest costs. Tilson’s story with WRLD shows how important a catalyst is for a short position. For influential active investors, if there is no catalyst, they can create one by publish some 100+ pages presentation (David Einhorn’s Green Mountain Coffee short, and Bill Ackman’s Herbalife, for example). For others, I think Tilson’s advices are very valuable: if you believe in your thesis about a short, start your position small and keep following the name, wait for a catelyst and you can double up.

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