1Q17 | Bill Nygren Market Commentary (Abridged)
March 31, 2017
March 31, 2017
It sounds gruesome, but essentially, it is a liquidating trust with no-or-few expenses. See a 1995 report on the TPL trust that turned out to be prescient.
TPL Annual Report 2016 Go to last page to see acreage map. Use Google Earth to go view the terrain, then search for oil and gas activity in the area(s)
More annual reports: http://www.tpltrust.com/annual-reports.html
Texas Pacific Land Trust discussion
Part of my search strategy is to look for the quirky, weird stuff.
|“The one who follows the crowd will usually get no further than the crowd. The one who walks alone, is likely to find himself in places no one has ever been.” — Albert Einstein|
What do YOU think?
PS: Weekend Reading
OMC_Omnicom_Singular_Diligence I wish for more brevity!
The NASDAQ bubble showed the highest P/E ratios in stock market history due to low or no earnings technology companies.
Kopernik 1Q 2017 – Conference Call – Final Worth a read–note high and low market cap sectors of the market (see page 9)–a proxy for expensive and cheap. A search strategy.
Time in a Bottle – Final A good discussion of valuation methods in an era of distorted interest rates.
http://tsi-blog.com/2017/04/are-rising-nominal-interest-rates-bullish-or-bearish-for-gold/ A discussion of how to understand interest rates and gold. Note the analysis using data going back 90 years. Do not use a small smaple size.
https://youtu.be/bZfPJCAVQg0 Recent Greenblatt talk at Google.
Hunt for value in high priced stocks: http://otcadventures.com/?p=1912
http://horizonkinetics.com/market-commentary/4th-quarter-2016-commentary/ What will turn the tide for active investors. Or read commentary : Q4-2016-Commentary_Final
https://vimeo.com/209940152/f2154e4d3d Grant’s Conference Presentation
Q2 2016 Commentary FINAL (See section on ETFs vs. Individual Stocks)
Articles of interest:
In all seriousness, whether you agree with his thoughts on gold and resource investing, he has the proper attitude for an investor.
See the letter to shareholders from Tom Kaplan: NG_AR_2016 (pages 5-7)
and NG_AR_2015 (pages 2-10)
NovaGold may not be the cheapest long-dated option on the market because of the partnerships that they have with Barrick and Teck. Also, even if the grade of gold to tonnes of earth/rock is double the average resource, there are many other costs to consider when comparing projects.
Another long-term investor in a long-dated option (Seabridge might be sold for $0 to a major copper miner and then take back a gold royalty stream in return for the project to be developed) to read: SA_2015_Ann_Rep
A Strategy for investing in highly volatile, cyclical stocks
Once again, gold, silver and their mining stocks are selling off for whatever reason: risk-on as money floods into the stock market, rising nominal yields, 95% certainty of a (meaningless) 0.25% interest rate hike, momentum–take your excuse. The main point is to know your companies (valuation) and wait for sales like you do at the grocery store. This week we are having a sale on some miners.
As Sprott’s Rick Rule often says, “If you are not a contrarian in the resource sector, you are a victim. The above video is provided to show a particular investing strategy when your quality miners are selling off to prices where you estimate a margin of safety. However, it doesn’t mean you predict THE exact bottom. If your holding period is three-to-five years, you can occasionally pick up cheaper merchandise. Use prices to your advantage, not disadvantage. I also wouldn’t be surprised to see the miners sell-off further because of their highly volatile nature–huge operational and asset-based leverage–when gold or silver goes up or down, both the price of their product goes up or down and the value of their reserves. Never expect exact timing–a fool’s game. Also, miners are impacted by the cost of their inputs, so a rising gold/oil ratio is a positive, for example.
What about the gold price in my assumptions? I am assuming gold is money (“All else is credit”–JP Morgan) and thus I can benchmark it against world currencies. Gold has been THE strongest money relative to all other currencies for the past 20 years, 30 years, 40 years, 50 years, 100 years. Gold is THE only money and store of value that can’t be created out of electronic bits like FIAT MONEY. The stability of available supple is what makes gold the premier money. Of course, due to LEGAL TENDER LAWS, gold is not a currency in the U.S., except that may be changing in some states like Arizona: http://planetfreewill.com/2017/03/09/Ron-paul-testifies-support-arizona-bill-treat-gold-silver-money-remove-capital-gains-taxes/.
In fact, gold (originally silver) is the only Constitutional money allowed–http://www.heritage.org/constitution/#!/articles/1/essays/42/coinage-clause
http://www.macrotrends.net/1440/hui-to-gold-ratio Now view the miners in perspective.
P.S. Let me know if anyone wants to see a NPV case study on a miner.
My goal is to organize a comprehensive analyst course using the best investors’ teachings and lectures. For example, Buffett, Munger, Graham, Fisher, Tweedy Browne, Walter Schloss, Klarman, and many others etc. Why not use original sources of the best practitioners? This is the course I wish I had twenty years ago. It will be Buffett and Munger teaching not me.
The course would cover search, valuation, portfolio management, and you (how to improve decision-making). There would be different modules continuing articles, case studies, videos from Columbia Business School and others. We would go from DEEP VALUE to FRANCHISE INVESTING. Valuing assets to assessing franchises. Understanding reversion to the mean and slow reversion to the mean. You need to understand that when a moat is breached-watch out! Note Nokia in cell phones.
I would have to make it a private web-site because of copy-right. This would be more of like a private study place, library, and discussion area for learning. There could be a in-person value class in some convenient location depending upon interest once folks have had a chance to go through the modules.
For example, putting ebitda into perspective might be a mini-module on a sub-set of cash-flow: http://csinvesting.org/placing-ev-and-ebitda-into-perspective-case-studies/ Now, if you scroll down to the last link, you can see that it was taken down. With a private web-site, you would see this: http://csinvesting.org/wp-content/uploads/2012/09/placing-ebitda-into-perspective.pdf
Let me know your thoughts because this would be a huge project to complete. What focus do YOU want? How would YOU design and make the course.
Have a great weekend!
Tim McElvaine explains his simple but effective process.
2016-05_conference_transcript_McElvaine Fund An excellent tutorial on Graham-like investing. Note his simple four-pronged approach. Read more below:
|Clark Street Value|
|Keep on track|
|Swiss financial markets commentary|
I downloaded several excellent articlues on the Capital Cycle from Marathon Reviews. Search for and find other good sources, then let others know at the Deep-Value discussion board–go to http://csinvesting.org/2015/01/14/deep-value-group-at-google/
The Meaning Crisis for College Students
helped by ultra-easy-money
Who wants gold?
Remember that you don’t have a good contrarian trade UNLESS this happens: