Weekend Reading Links

With all the research I have been going lately I have gotten way behind on posting links so here are a bunch that I think are very good.

Atul Gawande: Excellence Is Recognizing Details, Failures

The Price Of Paying Attention

How Not To Run A Hedge Fund: Geoff Grant Edition

Advice From Jeff Bezos

How Did R.A. Dickey Master The Knuckleball

Jason Zweig Interviews Seth Klarman

How Did I Come Up With My 16 JNets

What Drives Operating Metrics?

Free Ebook: 115 Profitable Investing Ideas

How Buffett Made Money In Bad and Volatile Markets

Warren Buffett’s Alpha, Student of Value, Making Mistakes, Free Session on Investing, and A New Blog

Chasing Warren Buffett’s Alpha is an article from the CFA Institute about Warren Buffett’s performance since 1976 to 2011 where they try to determine what has made Buffett’s performance over that time period so special.  This article also contains the link to the original paper about the conclusions that the writers came to.

Yuri Gagarin ($4PX:BU) is another fantastic valuation and analysis article from Student of Value.  Pay close attention to how he thinks about the company.  As always the way he thinks about things and presents them is amazing to me.

Why Letting Yourself Make Mistakes Means Making Fewer of Them is an article from Psychology Today with lessons that I wish I would have learned in my teenage years instead of only recently.  I used to be so afraid of failure that I never tried new things. Only over the past 4 years or so have I started to try a lot of new things.  Trying new things, and making mistakes, has not only made me a vastly better investor, I think it has also made me a much better person as I have been able to improve in every aspect of my life.

Free Session on Global Value Investing click on the interview transcript link for the free download of the interview.

I found a new blog that looks very promising, I hope you enjoy, and if you do enjoy the blog I recommend following him on Twitter @SilvioDixon. http://instant-genius.info/

Next up will be my valuations and quick thoughts on the rest of my portfolio from before my transition to actual investing and what I am doing now.

Weekend reading links

Reading Links

Investing In Wide Moat Businesses is a free download from the Manual of Ideas that talks about characteristics of wide moat businesses and how to spot them.  I have not finished reading this yet, but I can tell the knowledge inside will be very good.

Warren Buffett’s Evolution and His Three Investment Styles is a write-up from http://can-turtles-fly.blogspot.com/ about how Warren Buffett invested in the past and how he invests now, the differences in his thinking and why he has had to change over time.  Good read for anyone interested in Buffett.

The Theory of Investment Value: Four Enduring Takeaways on Dividend Investing from John Burr Williams is a write-up from the CFA Institute on dividend investing from the perspective of the 1930’s and how the principles still apply today.

The Value Gene is an interview of Paul Isaac talking about Walter Schloss, his father Irving Isaac, what he is investing in now, and what he thinks of the overall economy.

Activision Joins Game Industry Search For New Ways People Play is an article from Seeking Alpha where the author goes into detail on the declining video game industry.

7 Things Highly Productive People Do is an article from Farnam Street on how you can become more productive.

Hope you enjoy the links.  Now it is time for me to search for another company to research.

L.B. Foster, Incredible chart on investment fees, and Optimizing the Investment Process.

L.B. Foster News

Original article from Seeking Alpha here.

PITTSBURGH, July 25, 2012 /PRNewswire/ — Pittsburgh, Pennsylvania-based L.B. Foster Company (FSTR) has been awarded the company’s largest rail products contract, valued at approximately $60 million, by contractor Kiewit/Kobayashi, a Joint Venture for the county-wide construction of the Honolulu Authority for Rapid Transportation (HART) passenger transit system. L.B. Foster rail, concrete ties, direct fixation fasteners, third rail with accessories and special trackwork will be installed throughout the Honolulu Rail Transit Project’s new elevated railway system and maintenance yard.

(Logo: http://photos.prnewswire.com/prnh/20101222/MM21387LOGO)

L.B. Foster offered a comprehensive materials and logistics package that maximizes purchasing efficiencies and meets critical scheduling requirements for the HART project. “Our company provided the highest quality and value offering, most comprehensive logistics package and the professional project management team necessary to successfully satisfy the requirements of such a large municipal project,” noted Greg Lippard, Vice President of Rail Products Sales at L.B. Foster Company.

“Our L.B. Foster team has a long and successful relationship with Kiewit. We have worked closely with this leading contractor to provide quality products for signature projects throughout North America,” said Hakan Eksi, General Manager of L.B. Foster Transit Products.

Incredible chart from the Motley Fool

This chart is showing the difference in returns.  The Vanguard fund has a 0.05% fee, and the generic mutual fund in the chart has a 1% fee. It ends up being a difference of almost $600,000 over the time period.

I ran into the same problem this writer for the Fool did.  I saw that my parents were being charged 6% fees every time their investment advisor bought or sold any shares they owned.  That is not including the sometimes above 2% fees that were being charged by the mutual funds he had them in.  I was shocked to see those huge fees, especially since there are comparable funds or ETF’s that he could have put them in that had fees as low as 0.05%

Stated another way, and not even counting inflation, the way he had their funds set up, they had to produce returns of at least 8% a year just to break even.  Suffice it to say that I am now running their retirement funds.

Michael Mauboussin on Investment Process

This is a fantastic and very important article where Michael Mauboussin talks about how it is extremely important to come up with a great investment process and how that can lead to great returns over time.  This article also talks about how investment returns, especially short term, can sometimes be misleading.

“Mauboussin believes the main difference between good and great investors comes down to temperament and focus. Good processes and good outcomes deliver deserved success, just as bad processes and bad outcomes are a form of poetic justice. Conversely, bad processes that yield good outcomes are just dumb luck. Investors often confuse the two. Successful poker players and renowned economists agree that better decision making comes from evaluating decisions on how well they were made rather than on outcomes.”

 

I encourage you to read the whole article at the above link.

More Activision Blizzard and Vivendi news, and a Warning from the CFA Institute

More Vivendi and Activision Blizzard news

I thought this article was interesting, mainly because I have never thought of this possibility.  The article talks about how Activision Blizzard could buy its own shares back from Vivendi, instead of Vivendi spinning off or selling ATVI to a third-party.  It speculates that because Vivendi is having trouble selling Activision, and since ATVI has about $3 billion in cash and almost no debt that they could finance the rest of the transaction.

To me this makes zero sense from both companies perspectives.

  • For Vivendi they would most likely not get the premium on the shares that they are looking for, meaning they would not be able to pay down their debt to the levels they would want.
  • For Activision this would mean they would lower their cash hoard, and have to leverage up their balance sheet just to make the transaction happen.  Seems like a loser to me on all accounts.

I am interested to see if anyone has any differing thoughts on this possibility.

Here is an overview of the gaming industry and the profitability of each company.

Three things surprised me about this graphic: 1) That Gamestop is making as much money as they are.  2) That ATVI was behind Nintendo, Namco Bandai, Sega, and only slightly ahead of EA in terms of profits. 3) That Zynga is making over $1 billion in profits.  Most of their games are free to play on Facebook aren’t they?  I do not know much about Zynga, I have never played any of its games, and only heard of a couple of them, so if anyone else has information on them could you please let me know.

A Warning from the CFA Institute

This article talks about decision making errors that could be hurting your investment performance and talks about five active thinking strategies.  Some pretty interesting thoughts.

My next post will be a mini review of Valuation: Measuring and Managing the Value of Companies

Update on what I am doing, an aritcle on ALEX from a CFA, and two free digital magazines

What I am currently doing

I have been researching a new company and just finished up the valuations today.  It is a boring company that most have probably never heard of, which I like, has good margins, no debt, decent amount of cash, and best of all the company is currently valued about where I could be a buyer.

I still need to finish up my research and hope to have an article up within the next few days on this promising company.

I have also been looking through some of the sites from Jae Jun’s free digital magazine that I posted about yesterday, and have found a lot of good information.  I am going to incorporate some of the sites into my daily reading and hopefully I will not only learn a lot, but maybe even find some potential companies to research and invest in.  Again, I encourage everyone to at least look at the magazine to find some great investing, search, and analysis websites.

Alex article from a CFA

A CFA is a Certified Financial Analyst. The CFA designation is incredibly hard to get and the last time I checked there were only either 100,000 or 200,000 in the entire world.  They generally know what they are talking about.  The article talks about ALEX and how he has been an owner since before the spin-off, and that he is very interested in the post spin company mainly for the real estate assets they hold.

The writer pretty much comes to the same conclusion about ALEX that I stated in my two articles about ALEX, here and here.  I am just putting his article on the blog because it lets me know that I am doing something right if I come to the same conclusions as a CFA.

Two more free digital magazines

The first free magazine is the Valuewalk Daily.  It aggregates information about world news, business, the economy, investing, etc.

The second free magazine is from the CFA Institute.  It mostly talks about things that are going on in the investing world, companies, analysis, the Chinese economy, etc.  Looks to have some very valuable information in it.

I hope you enjoy.