Global Macro Trading Journal

Quote from Daal:

Today is a good example why shorting the EUR is so tempting. A bunch of bad news comes out and the currency drops 1%, even though the CDS and bond markets seem to be expecting a default(Along with most analysts and economists) the markets still respond to bad news flows and it seems likely the bad news flow will continue and get quite a bit worse once the banking systems get hit

At the same time, maybe buying German bunds is an even better bet than shorting EUR
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Or not. For all we know, the EU will announce a definitive agreement to kick the can down the road to 2013, the Greek protesters will go home, and the euro may finish the day green.

Euro may go to zero from here for all I know, but I don't prefer to be in trades that can move with or against be by a massive amount every time some eurocrat opens his mouth.
 
Irish finmin wants haricuts on senior AIB debt. Says it on the same day he is meeting with Tim "no haircuts, not now, not ever" Geithner, and as Greece is blowing. Euro going bye-bye. Loving it.
 
Greenspan on Charlie Rose talked about a possibility to the Greece situation that could solve their problems overnight: an EU guarantee of their debt
He said he thinks the probability was extremely low of that. I believe they are higher than he thinks but I do agree with that general sentiment that a default is the most likely option
 
I increased my stake on BRKB. I agree with the WSJ article and Tilson, stock seems quite undervalued compared to the actual business risks
 
Hi,

great thread. I have bought a very long-term position in BRKB. Is this a trading position for you? Book value is 1.1, which is the lowest of the last 10 years. The operating businesses are now around 50% of the value, therefore the premium to book should be actually growing not declining, because the investments are marked-to-market, whereas the operating businesses are not. So in terms of discount to intrinsic value, Berkshire probably has never been cheaper. It's a great risk reward investment. The equity is probably safer than most bonds. Many great value investors bought Berkshire the last few years, but now one can get an even better price.

You might be interested in these slides from Tilson, if you haven't seem anyway:

http://www.scribd.com/doc/46543650/Whitney-Tilson-Analysis-on-Berkshire-Hathaway

I like his analysis, although his funds haven't done to well the last 3-5 years. He has been a bull on BRK for a couple of years, so perhaps he gets into stocks too early. Often I look for stocks that investors I like have bought in the past and performed poorly. BYD and SHLD might be worth a look, certainly from a trading perspective. From a deep value perspective SONC.PL might be interesting, which Pabrai bought in 2008. Down 60% from his entry prices.
 
Quote from macrotrader:

Hi,

great thread. I have bought a very long-term position in BRKB. Is this a trading position for you? Book value is 1.1, which is the lowest of the last 10 years. The operating businesses are now around 50% of the value, therefore the premium to book should be actually growing not declining, because the investments are marked-to-market, whereas the operating businesses are not. So in terms of discount to intrinsic value, Berkshire probably has never been cheaper. It's a great risk reward investment. The equity is probably safer than most bonds. Many great value investors bought Berkshire the last few years, but now one can get an even better price.

You might be interested in these slides from Tilson, if you haven't seem anyway:

http://www.scribd.com/doc/46543650/Whitney-Tilson-Analysis-on-Berkshire-Hathaway

I like his analysis, although his funds haven't done to well the last 3-5 years. He has been a bull on BRK for a couple of years, so perhaps he gets into stocks too early. Often I look for stocks that investors I like have bought in the past and performed poorly. BYD and SHLD might be worth a look, certainly from a trading perspective. From a deep value perspective SONC.PL might be interesting, which Pabrai bought in 2008. Down 60% from his entry prices.
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Yes I saw the Tilson presentation which prompted my interest. I'm not sure the premium to book should be growing, Buffett has signaled the returns on the future won't be as great as in the past and there are less acquisitions available now that they are so big. So the premium to book won't mean revert but I do think its more likely than not that Tilson is correct in his analysis

Worst case scenario here is that the stock moves around but doesn't return much but its hard to lose money holding BRK for a few years, since I bought using USDs that were yielding exactly 0% it seems like a good trade
 
Quote from Daal:
http://ftalphaville.ft.com/blog/201...t-event-default-who-cares-danske-bank-doesnt/
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He's right, although a bit off the mark. What happens with all this "voluntary" rollover malarkey matters because of the ratings agencies. And I don't mean that it matters because they'll downgrade Greece to full default, either, so I agree with the Danske guy there. However, the RAs have said that any sort of haircut on Greece would imply an automatic downgrade of Ireland, Portugal etc. So contagion is the issue, rather than anything else.
 
What I mean with growing book value is the following.

The investements of Berkshire such as KO, WFP, AXP are marked to marked. These public traded securities are worth roughly 80'000$ per A share. Say we value the other operating business at 10x pretax earnings as Tilson did, then the investments is 50% of the intrinsic value. They already are priced in with about a 2-3 book value. Therefore the intrinsic premium over book value really comes from the operating businesses which are carried at book value. Therefore if this part of this business grows the multiple of book value should grow also.
 
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