Originally, I was interested in Osisko since it has dropped by three quarters since 2011 and it seemed cheap. However, the company consistently uses aggressive accounting so it’s not as cheap as it seems. Overall, Osisko is hard for me to evaluate since (1) I don’t trust the promotional management and (2) there isn’t enough information being disclosed. I also prefer to invest in management teams that are really good at generating value.
Here are two: RX Gold and Veris Gold
I’ve been researching the dialysis industry because Berkshire Hathaway owns DaVita (DVA), one of the largest dialysis providers in the US. However, I’m not quite sure why Berkshire Hathaway owns this stock. The for-profits are rarely rewarded for creating value while there are large financial rewards for unethical behaviour. Buffett has been vocal about not owning Lorillard (a tobacco company) so I don’t see why he would be ok with owning DaVita. It is possible that Buffett hasn’t researched the company much as Ted Weschler (probably) made the decision to buy it.
Historically, DaVita has been very rewarding for shareholders ever since Kent Thiry saved it from bankruptcy and turned it around. However, his integrity strikes me as questionable and I’m of the opinion that entrusting your money with unethical people is not a good idea.
In my opinion, Warren Buffett’s 1989 shareholder letter is one of his most significant ones as it has his greatest insights buried in there.
I don’t think that the shipping and drilling industries are great places to look for unusual returns. Over the entire boom and bust cycle, investors generally do not make much money. Historically, the way to make money has been to time the boom and bust cycles in the industry.
Here’s how the market making business generally works:
Market makers pay exchanges money in return of special trading advantages over everybody else. Then they use these special advantages to fleece the exchange’s other customers (mostly institutional clients).
Retail brokerages can route their clients’ orders to an exchange, to an off-market venue, or to their own market making division. Retail investors still get fleeced… just not on an exchange. Knight Capital Group (KCG) was one of the pioneers in fleecing retail investors. They would buy order flow from companies such as Etrade and use the information to gain an edge.
In investing, some people often make the argument that the profitability of a company will move away from the extremes towards the average of its (public) peers. I see it often on valueinvestorsclub.com. For example, this writeup on Aeropostale argues that Aeropostale’s profitability should trend back towards its past. I think that this is a dangerous and flawed argument.
