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    Investments or strategies mentioned on this site may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on the site. Before acting on information on this website, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
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    (C) 2006 by Ameya Desigar. All rights reserved.
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Moving the Blog

Posted by adesigar on March 20, 2008

To everyone that visited the blog, Thanks.

I have decided to continue the blog on my own site because it allows me more freedom to customizing the site. All future posts will be posted at www.invideas.com. I hope you visit me there.

Ameya

Posted in Articles | Leave a Comment »

Back after a loooong break

Posted by adesigar on August 26, 2007


6 months without a post. Its time to dust off this site again. I thought i could start working on the blog back in February, but i was wrong. There weren’t enough hours in a day. I was wishing for 48 hour days. Things are finally settling down (fingers crossed).

Its also been 1 year since i started this blog so its time to lookback and see how i did.

Next Warren Buffett or Berkshire Hathaway – MKL/WTM/LUK/BAM are up SHLD/IACI are not. This is a very long term play so its no use looking at it over 1 year

What I got wrong

  • Is Google’s domination about to end. – They took market share from most competitors and shares have increased 25%. I still don’t like the company’s moat so I still don’t like the stock.
  • Investing in the Video Games industry – I was wrong on the game developers i picked. ERTS and Konami have barely moved.
  • Time for a market correction - I was right about the market needing a correction. I was wrong about when it would happen.
  • Whats next for Sears Holdings – I hoped SHLD was all Eddie Lampert would work on but i was wrong, he is starting a new fund to invest in Citigroup stock. I also hoped to see some acquisitions/investments using SHLD’s money which is currently being used for stock buybacks.

What i got right

  • Ka-ching in on the dollars decline. – The dollar is significantly lower against most currencies
  • Valuing Berkshire Hathaway – On Aug 23rd 2006 I said the B shares which were trading at $3100 are easily worth $4000. One year later and they last closed at $3995.
  • Richest countries in the world – People seem to have taken a liking to Canadian Energy and Australian Mining companies this past year.
  • Water the most important natural resource – A 25% increase in the water index says it all.
  • Has gold lost its glitter – With all the market volatility that took place this year Gold should have shot up but it didn’t.
  • Investing in the Video Games industry – Gamestop and Nintendo are both up substantially

How did I do? You be the judge.

Posted in Articles | 1 Comment »

CanRoy’s

Posted by adesigar on February 16, 2007

Please investigate investment suitability and your own tax implications before investing in Royalty trusts. The details i have provided may be incomplete or inaccurate.


What is a Royalty Trust?
Royalty Trusts are natural resource companies that because of their company structure do not have to pay taxes at the company level as long as they pay out 90% or more of their earnings to shareholders. Canadian Royalty trusts pay very high dividends typically in the range of 10-20%. Canadian trusts (unlike US trusts) are set up to perform exploration and development and/or aquire new proporties to replenish their reserves. They are set up to operate indefenitely.

Whats this new Tax Rule I hear about and what effect will it have?
The finance minister has a proposal that starting in 2011 all existing trusts should pay corporate taxes.

If the proposal goes thru, in the 4 years till 2011 you will recieve back 40-72% of your investment in the form of dividends. While the company is paying out 90% of its earnings there is very little left to aquire additional reserves. After 2011 most of these companies will use the money to fund expansion of their resource base. The dividend payment will drop to about 3-5% because the companies dont need to pay out their income. However because of increases in reserves dividend payments in the future will grow at a much faster rate. If the proposal does not become law (the trusts are lobbying against it or asking for an extension to 10 years) companies will keep paying dividends at these high rates and the stocks will climb as dividend investors pour back in.

List of CanRoys

My favourite is Penn West Energy (PWE) the largest energy trust in North America. It is an exploration and production company which converted to a trust in 2005 to increase shareholder returns. I think the company can increase their production significantly without the need for additonal capital. It has 89% working interest in 4 million acres of undeveloped land which is suitable for oil and natural gas exploration and production. The management is also very good at making acquisitions. To top it all Murray Edwards who used to be chairman of PWE is still one of the biggest shareholders in the company. Since the company has a history of being an exploration and production company it should do well post 2011 compared with other energy trusts.


What about taxes?
The Canadian government applies a 15% non-resident withholding tax on distributions to U.S. investors. You can apply for a refund of a portion of the amount withheld. If you hold the shares in a taxable account (non IRA) then you can claim it on your US tax return as a foreign tax that you paid. You can claim the foreign tax credit on your 1040. The limit is $300.00 single or $600.00 filing jointly per year. If the amount is greater than what you can fill out on your 1o40 then you need to use IRS Form 1116. If your marginal tax bracket is over 15% you should get a full refund. If below 15% then you will only get a partial refund.

For more details check IRS publication 514 (You need to select the document from the list and then retrieve it)

Conflicts: I do not own shares in any of the companies mentioned but am considering PWE.

Posted in Articles | Leave a Comment »

Founders Keepers

Posted by adesigar on February 7, 2007


For a founder of a company, the company is usually his/her life’s work. A legacy to leave behind. Its his baby. He/she remembers starting it with a small amount of money, remembers the difficult times, the growing pains. Founders are emotionally attached to their company and it would devastate them if the company ever failed. They will always make decisions that are in the best long term interests of the company. Unlike most managerial morons who are clueless about the company/industry, the founders are usually people that understand the company and the industry inside out. Founders are usually frugal and avoid unnecessary expenses or expensive stock options. They focus on keeping the company profitable, the customers satisfied and the employees happy. They generally stick to what they understand and avoid the dumb mergers and acquisitions that the managerial mercinaries from business schools seem to be so fond of. They take care of the company and the stock follows the growth in the business. Usually companies will significantly outperform the market when they still have their founders as the CEOs.

Here is a list of great companies run by founders.
Apple, Steve Jobs
Berkshire Hathaway, Warren Buffett
Capital One Financial, Richard Fairbanks
Carmax, Austin Ligon
Chesapeake Energy, Aubrey Mcledon
CostCo, James Sinegal
Echostar, Charles Ergen
FedEx, Fredrick Smith
Kinder Morgan, Richard Kinder
News Corp, Rupert Murdoch
Toll Brothers, Robert Toll
Whole Foods, John Mackey

Also watch Dell whose founder Michael Dell is back as CEO.

Posted in Uncategorized | Leave a Comment »

Ezvesting returns after a 2 month break.

Posted by adesigar on January 23, 2007

As some people may have noticed I have not posted for 2 months. We had a baby girl on Nov 12th 2006. She came a month early :( . With life returning to normal, watch for new articles in the coming days.

Diaper duty, sleepless nights
her beautiful smile
makes it all worthwhile
– AD

Posted in Articles | 1 Comment »

Investment Ideas from the “Value Investing Congress”

Posted by adesigar on November 10, 2006


One of the best places to get some great investing ideas is the 2nd Value Investing Congress which is in progress as i write this. The Value Investing Congress is a collection of some of the best and brightest value investors in the country. Most of the the speakers at this congress follow the Graham/Fisher/Buffett form of investing and will be sharing their best investment ideas.

This year the Speakers and their investment ideas are

Speaker Manager of Investment Idea
Joel Greenblatt Gotham Capital Autozone (AZO), Aeropostale (ARO), Claire’s Stores (CLE)
Larry Robbins Glenview Capital Thermo Fisher Scientific (TMO)
James S. Chanos Kynikos Associates - Not Applicable – Spoke about shorting stocks, mentioned Leapfrog and an Online gambling company as successful shorts
William Ackman Pershing Square Borders Group (BGP)
Curtis Jensen and Amit Wadhwaney Third Avenue Funds Cimarex Energy (XEC)
David Einhorn Greenlight Capital -
Christopher H. Browne Tweedy, Browne Company,LLC -
Bruce Berkowitz Fairholme Capital Management Canadian Natural Resources (CNQ)
Kian Ghazi Hawkshaw Capital Management Lesco (LSC)
Lisa Rapuano Lane Five Capital Management -
Mohnish Pabrai Pabrai Investment Funds Pinnacle Airlines (PNCL)
Thomas K. Brown Second Curve Capital CompuCredit (CCRT)
Guy Wyser-Pratte Wyser-Pratte Management Co. - Not Applicable – Spoke about shareholder activism
Barry Minkow Fraud Discovery Institute -
Whitney Tilson and Glenn Tongue T2 Partners LLC USG

I cannot guarantee the accuracy of the list above since im collecting the information from other articles and blog posts. The table above will keep getting updated as I find out which other investments have been recommended. Any help in gathering this information is greatly appreciated.

Thanks
Ameya Desigar

Posted in Investing ideas, Lists | 11 Comments »

Investing ideas from Bill Gates

Posted by adesigar on November 4, 2006


Bill Gates the founder of Microsoft has often been described as “The best businessman in the World”. What made Microsoft such a successful company? It doesnt make the best products, it is not a true innovator either. The success of Microsoft is the business acumen of Bill Gates. So what is Bill Gates investing in? Most of his investments are managed through a Private Investment firm called Cascade Investments. There is no way to find out which private companies Cascade invests in but its relatively easy to find their investments in Public Companies because they need to buy so many shares that they usually appear in the top 10 shareholders of the company.

Here is a partial list of companies held by Bill Gates’ Cascade Investments

AGL Resources(ATG)
Berkshire Hathaway (BRK.A)
Canadian National Railway (CNI)
Costco (COST)
Fisher Communications Inc (FSCI)
Four Seasons Hotel (FS)
Grupo Televisa (TV)
Otter Tail Corp (OTTR)
Pacific Ethanol (PEIX)
PNM Resources (PNM)
Republic Services (RSG)
Scholastic Corp(SCHL)
Seattle Genetics (SGEN)
Six Flags (SIX)

Posted in Investing ideas, Lists | 3 Comments »

Whats next for Sears Holdings?

Posted by adesigar on November 2, 2006


Eddie Lampert has 3.5 billion in Sears Holdings. The merger between Sears and Kmart has gone well. Remember SHLD is not a retailer. SHLD is a holding company that happens to currently own 2 retailers. One thing i like about SHLD is Eddie Lampert is focussed on profitability and not on same store sales growth like most dumb retailers. Yes i know its the industry metric, I dont care. I want growth in profits and thats what Eddie delivers.

Here is a quote from the Sears Holdings message from the Chairman which hints at SHLD becoming a new Berkshire
“My goal is to see Sears Holdings become a great company whose greatness is sustainable for generations to come.”

Similarities between Eddie Lampert and Buffett.
Both started investing at an early age, have great long term records. Started a partnership/Investment Management companies at a young age with great long term returns. Both have virtually all of their net worth in these companies. Both have recieved special permission to delay filing their stock purchases. Both care about long term value and profitability.

What follows is pure conjecture. DO NOT MAKE ANY INVESTMENT DECISIONS BASED ON WHAT I PULL OUT OF MY HAT.

The long term future for SHLD.
Eddie Lampert will give away shares in SHLD to current ESL Management Partners.
SHLD becomes Eddie Lamperts version of Berkshire Hathaway.

SHLD in the near future
Rumors have been floating around that Eddie Lampert is prowling around for takeover targets. I dont believe that the rumors about a Home Depot takeover have any substance. Id really like to see Eddie Lampert buy an insurance company like Progressive to manage its float. My candidate for companies that Eddie Lampert can takeover and turnaround OR companies with good Real Estate value which he can unlock are

  • Gap Stores
  • Radio Shack
  • Pier 1 Imports
  • Pep Boys
  • Six Flags

Posted in Articles, Opinions, Predictions | 3 Comments »

Time for a market correction

Posted by adesigar on October 24, 2006


No question about it. The Dow and S&P have been going straight up for months. Not even a single triple digit down day.

  • The Housing market is crashing – The market doesn’t care.
  • Inflation is at the high end of the Feds comfort zone – Fed who? says Mr Market
  • North Korea has nukes – Market shrugs it off.
  • OPEC cuts oil production – So what says the market.
  • Iran/Nigeria/Venezuela problems could spike oil prices – We got reserves.
  • Amaranth collapse – Did something happen? Buy Buy Buy.
  • Too much money chasing too few investment opportunities – Private Equity buying anything they can for an LBO
  • High flying stocks and companies based on eyeball count are back. – Myspace, Facebook, YouTube and anything that’s Web 2.0
  • Momentum funds are back – Lets chase the market, what a brilliant idea. NOT
  • Mutual Fund Mondays are back – Retail investors chasing mutual funds that have already outperformed.

AND finally

  • Frequent use of the scariest words in the investing: “This times its different because….” – Yea right, its different because people want to fool themselves into believing its different

So does that seem like a Goldilocks scenario? To me it seems like a Deja vu from 2000. A lot of people (who seem to live in a Toy story world) are convinced the markets are heading “to infinity and beyond”. Ok I’m exaggerating, but at the very least we need a 5% (600 points) correction to remove froth from the markets. An 8-10% correction would be better IMO.

Posted in Opinions, Predictions | 3 Comments »

The return of Fidelity Magellan?

Posted by adesigar on October 24, 2006


Peter Lynch managed the Fidelity Magellan fund from 1977 to 1990 averaging 29% returns over the period of 14 years. At one point the fund grew assets to an unmanageable $100 billion. In recent years the fund became an Index hugger with most stock picks matching the S&P. Factoring in expenses the fund underperformed its category and even the S&P 500 index for years.

Stansky who managed Magellan for nearly a deade retired October last year. He was replaced by Harry Lange. One year later the fund looks a lot more interesting to me. A year ago the top 10 holdings in order of percentage of assets were GE, Microsoft, ExxonMobile, HomeDepot, Citigroup, J&J, Intel, Lowes and Viacom. This year the fund has Nokia, Slumberger, J&J, UnitedHealth, GE, Peabody, AIG, Google, Genentech and Corning. When you manage $45 Billion you need to find good large cap stocks wherever you can, so its great to see Harry Lange is looking at international stocks, the fund has Nokia, Nomura, Canadian Natural Resources and Samsung among its top 25 holdings.

Only time will tell if the fund returns to its glory days but its a step in the right direction.
Conflicts: My 401k is managed by Fidelity and I have avoided the Magellan Fund in the past.

Posted in Articles, Mutual Funds | 1 Comment »

 
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