(in Cantonese) Economic Analyst +Wallace Chan & Independent Reporter Kempton Lam chat re Bank of Canada Governor Mark Carney to lead Bank of England.
After reading AppleSimon’s article “利字當頭：給炒股學生的一點建議“, it got me interested enough to read the original article (see posted below). Simon’s discussions re 「集體負責」, Other’s People Money, and Principle-Agent problem are worth thinking about. What Simon and the original article did not talk about was some of the potential “structural problem” with the HKBU investment club‘s design/setup.
– “每股最少持有一個月” Questions: How often do they buy and sell the stocks inside the portfolio? Since they are “learning”, how do they resist the urge to actively do something to show that they are learning?
– “除設有主席、副主席外，另設四名分析員。” Questions: These positions, I presume, are picked/volunteered/elected? And are they changed yearly? Presumably, the chair person is the most senior student in the group? Again, the most fundamental issue I have with this is that many investments may take long time to mature and the lessons “learned” here may create a very short-term mindset, unfortunately, mirroring the many Hong Kong “investors”/gamblers. Again, I am not saying these students day-trade, but then an effective time horizon of “months” and, I am guessing, “around 12 months” is not a great idea.
– “避免學生養成炒賣習慣” Comment: Really? I guess it is all a matter of degree. To me, flipping stocks in the frequency that I suspect (but have no prove) is already “炒賣習慣”!
– “老師會充當顧問，確保每個落盤都緊守投資原則，而非短線投機。” Comment: Again, I am very curious how frequent the stocks are bought and sold in the portfolio? Here is a simple question: How many stocks in the portfolio have been there continuously for more than one, two, or three years? Any one investment that qualify?
– “六年賺22%，年均回報4%” Comment: Finally, and may be the least important of all in terms of learning. Even with the financial crisis, I thought there would be more investments that return more than an average of 4% per year? What is HK government bond’s return during those time periods?
For the record.
Facebook (FB)上星期五 (May 18, 2012) IPO，開市價由IPO的$38跳升到$42，但最後以$38.23收市 (較IPO價微高23仙)。FB 星期一以$36.53較星期五收市價低開$1.70，星期一早午未收市前，我很高興可以與陳心田(Wallace Chan)首次合作用廣東話在 YouTube (LIVE，直播) 及 Google+ Hangout On Air (直播) 將我及心田(Wallace) 所知的 Facebook 講一講，與大家分享所謂的 Facebook “投資”。星期一 Facebook 最後以$34.03收市，較開市價的$42 及 IPO價$38 低 18.9% 及 10.4%。
Have a read of “Facebook employees have millions. Now what?“
An older (Jan 2011) but interesting article from Bloomberg BusinessWeek, “Worthless Stocks from China – When a retiree in Texas discovered that some Chinese companies listed in the U.S. are frauds, he unleashed an army of short-sellers“.
MarketWatch, “China staged ‘hostile’ audit of Citi: report“
““He’s [Todd Combs] got the best chance of being the successor, but if we find the right guy or gal, we’d take that person, too,” he said, adding that the matter hasn’t been decided.
Mr. Buffett also told The Times that Li Lu, a Chinese hedge fund manager considered one of the other top candidates, has decided to stay in his fund.“
A few more interesting articles,
– Carol Loomis, “Meet the leading contender to manage Berkshire’s billions”
– Alice Schroeder, “What I Know About Todd Combs (Updated)”
– Bloomberg, “Berkshire Names Fund Manager Combs to Help Steer Investments”
A very interesting article about Li Lu (李录/李錄) and Berkshire Hathaway/Warren Buffett because of who is quoted (Munger) and where it is published (WSJ). I don’t know Li Lu‘s investment style/insights at all, with BYD one and only major successful investment deal (with BRK has a hand in spotlighting), I don’t have enough information to decide how much of the BRK portfolio should Mr. Li be responsible for? I also want to hear more about the “team approach” idea. Fund managers responsible for regions or business areas?
Here is the WSJ article for the record (with emphasis added). (also see this 2009 entry)
BUSINESSJULY 30, 2010
From Tiananmen Square to Possible Buffett Successor
By SUSAN PULLIAM
Twenty-one years ago, Li Lu was a student leader of the Tiananmen Square protests. Now a hedge-fund manager, he is in line to become a successor to Warren Buffett at Berkshire Hathaway Inc.
Mr. Li, 44 years old, has emerged as a leading candidate to run a chunk of Berkshire’s $100 billion portfolio, stemming from a close friendship with Charlie Munger, Berkshire’s 86-year-old vice chairman. In an interview, Mr. Munger revealed that Mr. Li was likely to become one of the top Berkshire investment officials. “In my mind, it’s a foregone conclusion,” Mr. Munger said.
The job of filling Mr. Buffett’s shoes is among the most high-profile succession stories in modern corporate history. Mr. Buffett, who will turn 80 in a month, says he has no current plans to step down and will likely split his job after he leaves the company into separate CEO and investing functions. Mr. Li’s emergence as a contender to oversee Berkshire investments is the first time a name has been identified to fill the investment part of Mr. Buffett’s legendary role.
The development illustrates that Berkshire is moving toward putting in place—possibly sooner than investors anticipated—certain aspects of its succession plan.
The Chinese-American investor already has made money for Berkshire: He introduced Mr. Munger to BYD Co., a Chinese battery and auto maker, and Berkshire invested. Since 2008, Berkshire’s BYD stake has surged more than six-fold, generating profit of about $1.2 billion, Mr. Buffett says. Mr. Li’s hedge funds have garnered an annualized compound return of 26.4% since 1998, compared to 2.25% for the Standard & Poor’s 500 stock index during the same period.
Mr. Li’s ascent on Wall Street has been no less dramatic. He spent his childhood shuttling between foster families after his mother and father were sent to labor camps during the Cultural Revolution. After the Tiananmen Square protest, he escaped to France and came to the U.S. Investors in his hedge fund have included a group of senior U.S. business executives and the musician Sting, who calls Mr. Li “hardworking and clever.”
Mr. Li’s investing strategy represents a significant shift for Mr. Buffett: Mr. Li invests chiefly in high-technology companies in Asia. Mr. Buffett typically has ignored investments in industries he says he doesn’t understand.
Mr. Buffett says Berkshire’s top investing job could be filled by two or more managers who would be on equal footing and divide up responsibility for managing Berkshire’s $100 billion portfolio. David Sokol, chairman of Berkshire unit MidAmerican Energy Holdings, is considered top contender for CEO. Mr. Sokol, 53, joined MidAmerican in 1991 and is known for his tireless work ethic.
In an interview, Mr. Buffett declines to comment directly on succession plans. But he doesn’t rule out bringing in an investment manager such as Mr. Li while still at Berkshire’s helm.
“I like the idea of bringing on other investment managers while I’m still here,” Mr. Buffett says. He says he doesn’t preclude making a move this year, though he adds that there is no “goal” to bring on an additional manager that quickly either. Mr. Buffett says he envisions a team approach in which the Berkshire investment officials would be “paid as a group” from one pot, he says. “I don’t want them to compete.”
Mr. Li fits the bill in some important ways, Mr. Buffett says. “You want someone” who “can think about problems that haven’t yet existed before,” he says. Read the rest of this entry »
“美貌智慧並重又一例證。 86年亞姐冠軍利智，自嫁給李連杰後，一直專心相夫教女，看似甘於平淡，實則她全副心機放在投資房地產。 20年前她以 439萬購入淺水灣明慧園，昨日以 4,008萬沽出，賬面勁賺 3,569萬。” – 投資年狂升10倍 – 2010年06月03 (蘋果日報)
投資20年升了10倍，可以算是”狂升”嗎？對一些記者和讀者，20年升了10倍，可以算是大數目。但想深一層，實在只要有12.25%複利增長 ((1 + 12.25%)**20)便會升超10倍了。在過去 20年來較高的通脹情況底下，長線投資者有超過12.25%回報的也不會太出奇。當然，近年的金融風暴可能將回報打了折扣，但相信有做工課的投資者應該也不是難事。
“富士康（ 2038）呢隻股票，近日收市報每股 5.68元，歷史市盈率高達 132倍，息率等於零（見「財華網」資料），計番轉頭，富士康在 2009年賺約四千萬美元，發行 71.43億股，即係每股盈利 0.434仙左右。通常一隻科技股能夠有咁高嘅市盈率，係因為高速增長之故，例如騰訊（ 700）嘅市盈率就有 52倍，但係，富士康嘅○九年營業額比○八年減少咗二十億美元，稅前盈利下跌 64%，何來增長呀？股市有好多奇妙事情，富士康至今仍然維持一個三位數嘅 P/E，實在係奇蹟中之奇蹟，笨人如左丁山冇法子諗得明，照推算，富士康股價連一蚊都唔值。但如果在 2010年富士康嘅純利可以變魔術，彈升十倍八倍嘅話，咁就係人哋精夾醒咯！
P.S. As far as I know, Foxconn operates on a really thin margin (operating margin of 1.69 % and net profit margin of 1.42%) Now, with the recent suicides of Foxconn employees, Apple decided to pay Foxconn more per unit thus allowing it to pay higher salaries. I have no idea if the same margins are maintained? So I don’t quite know the bottom line implication of those events. But a P/E of 139+ for company with margin this thin is a bit nuts.
After writing the insightful Warren Buffett biography The Snowball, Alice Schroeder has gained my respect and I look forward to read her analysis of Warren’s investment decisions.
Here is an excerpt from Alice’s Bloomberg column about the Burlington Northern Santa Fe deal and the 50-to-1 stock split, “Buffett Revisits Hunting Ground for Survivors“,
Warren Buffett called Berkshire Hathaway Inc.’s deal to buy the part of Burlington Northern Santa Fe Corp. that it doesn’t already own an “all-in wager on the economic future of the United States.”
If so, it’s a survivalist bet. The railroad business is never going away, but it’s not going to lead the economy out of recession, either. Buffett has spent a lot of time in the last year burnishing his legacy by tackling Franklin Roosevelt’s role as the verbal antidepressant for this wretched economy. As I have said before, though, Buffett isn’t as bullish as he sounds.
[…] A final motive I am confident about is that Buffett finally has a plausible excuse to split Berkshire’s B shares. He has spilled a lot of ink over the years decrying stock splits. A 50- to-1 ratio isn’t a stock split, it is a mincing.
If someone pays good money, for example $280, for a $150 legal banknote which they most likely (say 99.9%) will NEVER use, is it the same as thinking that 99.9% of these banknotes have been burned? How does these affect the bank’s obligation?
(note: burning a legal tender (a banknote) is illegal in many countries)
(By the way, most Post Offices around the world deals with this issue all the time as they frequently issue new stamps and collectors would buy these stamps and NEVER use them. Or will buy the stamps and immediately get the post office to stamp it on the day of their first issue.)