Ahead of the Buffett Curve

I like to review my share sales after three months. No particular reason for three months, it’s a quarter, it’s both long enough and not too long.  Today I’m going to make a tiny exception and review my Moody’s sales four days early. Back in April I sold MCO at $28+, today it closed at $26.52, 7.5% lower than when I sold. Meanwhile the S&P 500 is up 11.3%. Wait a second while I pat myself on the back… What I feel even more chuffed about is Warren Buffett now selling down Berkshire’s stake in MCO. Talk about confirmation bias overload. As John Hempton at Bronte Capital points out Buffet is a fantastic seller of stocks.

I normally focus on absolute performance first and relative performance second, but when it comes to my share sale reviews I reverse that. The relative performance is what counts. I find this often saves me from both unwarranted self flagellation and praise.

Take Netflix as an example. I sold Netflix back in February only to see it move ever higher for the next two months and despite a pull back it was 10% higher at my three month review. Fortunately the S&P and Nasdaq were up respectively 17% and 20% so I was able to leave my cat-o-nine-tails in the draw that day. For people who’ve been reading for a couple months I’m still not ready to talk about Leucadia, but I assure you my back has almost healed.

On a less self congratulatory note I was ahead of the Macquarie (MQG) curve today. Selling 40% of our holding in MQG an hour or so before the trading halt. The price movement before the halt indicates that some people had more than an suspicion that there’s good news afoot. After opening at $39.89 MQG had moved up to $41.10 by 2.26pm, a healthy 3% gain for the day. Then five minutes later $41.66, two minutes later $42.04. MQG requested a trading halt at 2.37pm with the price at $41.80.  Still as MQG force fed me the shares for $26.60 six weeks ago I won’t be complaining.

I’m currently eyeing up a couple companies which appear to have a better risk/reward profile than MQG and which I can actually understand. There’s also yet another SPP that I may be taking up. These Australian companies are sucking me dry, still you won’t hear me complaining about it like so many other commentators seem to be. Suck it up guys, if you portfolio is so large that $15k bites are too small for you bother with then you’ve really got nothing to complain about have you. Take the lambo out for a spin, have a cry into your Crystal and suck it up.

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4 comments

  • Not bad, you sold MCO before Einhorn dished the stock at Ira Sohn in May 2009. Any links?? hehe

  • MAp agrees to internalise management
    Macquarie Airports (MAP) reached agreement with Macquarie Group Limited (MQG) to internalise the management of MAp. As a result MQG would be issued 150 million new MAp shares, increasing its stake in its satellite from 21% to 27.3%.

    MAp said two separate Independent Board Committees had negotiated the agreement on behalf of its shareholders.

    Chairman of Macquarie Airports Management Limited’s Independent Board Committee (MAML) Trevor Gerber said the board had examined a range of options to address the gap between the MAp security price and the value of MAp’s airports.
    http://www.egoli.com.au/news/post/MAp-agrees-to-internalise-management.aspx

    For more info here is the presentation from MQG http://asx.com.au/asxpdf/20090724/pdf/31jq06xt63t1rr.pdf and the ASX announcement http://asx.com.au/asxpdf/20090724/pdf/31jq08f7xqbj7z.pdf

  • Thanks Peter, as they say even a broken clock is right twice a day.
    I don’t recall Einhorn shorting Moody’s, though now that I check I must have seen it as several blogs I read mentioned it.
    Here is the speech for anyone interested http://www.foolingsomepeople.com/main/TCF%202009%20Speech.pdf
    and his 2008 speech when he said Green Light Capital was short Lehman.
    http://www.foolingsomepeople.com/main/TCF%202008%20Speech.pdf

    No wonder MCO dropped heavily following Ira Sohn. People are going to be at Ira Sohn next year with their crackberrys and iphones poised to place a market order.

    I need to take a deeper look at Einhorn. His gambling has always slightly put me off him for some reason, but I guess it’s just his version of bridge.

    Here’s a quick probability story from my own life. Last year a car cut me off when I was going very fast on my bike, no I’m not super fit and fast, it happened at the bottom of a hill. I seldom wear a bike helmet, but had one on that day and it probably saved my life or at least prevented any brain damage. My friends were stunned to see the see the split helmet, as they couldn’t believe my luck in having it on.

    I explained to them that luck was not involved, it was all probabilities and risk assessment. I wear a bike helmet when I’m riding places where the probability of an accident outweighs my desire not to have bureaucrats dictate the rules of my life. I wear a helmet when my risk assessments says I should. I neglected to mention that with a little more bike skills I may have avoided the accident all together. Next time you break heavily on your bike make sure to get your weight back as far as possible!

    One friend said I make life way to complicated and it’d be easier to just wear the helmet all the time and not have to think about probabilities and risk assessments. I guess what is complicated to one person is fun to another. Beside which hardly anyone plays cards anymore so I gotta keep practicing my probabilities somewhere. This attitude is what worries my partner the most every day she leaves our kids in my care.

    If there is one thing I want to teach my kids it is there is no black and white and there is seldom a right and wrong. Almost everything is shades of grey with different probabilities. There is no can’t. Though I can’t seem to win that argument with my black and white partner 😉

  • If you’re going to listen to anybody about investing listen to Warren Buffet. I don’t know how he does it, but he knows how to pick em. I wonder what he would say about Mentor Capital (MNTR), my latest stock pick.

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