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General Discussion / Re: Dumb Question About Buying Treasuries
« Last post by BG2008 on Today at 08:17:14 PM »
Quote
1) Has anyone bought them from IB? 
2) Any thoughts on whether to buy a zero with 2 year maturity with different coupons?
3) Is everything considered interest, price appreciation and coupons?  Has your TPA been helpful? 
4) I've heard that if you own Zeros, you still have to pay taxes even if you have not received any coupons.  Thoughts? 

#1 - yes, but I have only bought long duration zeroes... was easy though.
#2 - I think you just buy the cheapest... they are probably are within rounding, so look to the lowest spreads...
#3 - What is TPA?  bond appreciation/discount is accreted to income on 1099's I believe... so it's all interest.
#4 - Correct...

#3 - TPA is my third party fund admin.  Does IB generate a bond appreciation/discount in the 1099?? I guess you don't have to calculate that manually?
#4 - Is the amount of taxes on the interest calculated by your broker via the 1099?  How is the interest known?
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General Discussion / Re: Dumb Question About Buying Treasuries
« Last post by BG2008 on Today at 08:15:06 PM »
Why not just buy VGSH?

VGSH yields 1.1%, if you buy the 2 year treasury, it yields close to 2%.  I'm more confident that I can sell my 2% 2 year treasury in case shit hits the fan than I can sell VGSH at $60 or whatever it trades at.  I'm also more confident that the 2 year treasury will trade at close to a 2% yield or even lower in case shit hits the fan. I think that the ETF could trade all over the place.
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Politics / Re: New California!
« Last post by Cardboard on Today at 08:04:49 PM »
"I posted about this in the GE thread. In my view it's unlikely for Berkshire to chomp GE or large parts of it. GE is a bureaucratic mess."

A bureaucratic mess... Could you please help us understand what this means at the corporate level while you never use these words at the government level?

I would like to understand why the right side of your brain cannot communicate to the left side?

Cardboard
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Why can't MBA, Corker, Warner let shareholders survive? Current shareholders are the rightful owners who have suffered for last 10 years, took a loss in the 2008 crisis (common shares fell from $60 to $0.19, preferreds haven't seen any dividends in last 10 years). I don't know what MBA/Corker/Warner has to gain by not appeasing current shareholders who are real people, working people, moms, dads, students, patients, voters, veterans and hardworking taxpayers. If they are fair to them while taking care of other things, they may even get an applause. Something is seriously wrong with Corker-Stevens-Warner-Watt.

Life is not fair and the "rightful owners" often get screwed.  The sooner we learn that, the less of our life we waste waiting for court judgments or politicians to provide our own subjective version of "justice".

Good luck :)
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@RichardGibbons
I reviewed this topic.
Thanks for shining a light on my (relatively weak) assumptions and for underlying other key issues.
Live and learn.

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Investment Ideas / Re: CVS - CVS Health Corporation
« Last post by Cigarbutt on Today at 05:25:49 PM »
"CVS seems a lot better positioned than Express Scripts to accomplish savings for clients / payers."
Cannot help specifically with that assessment but here are some tools.

The "optimization" of clinical care for rheumatoid arthritis has had parallel developments in the medical world and from the "cost management" industry which has been re-defining.
Typical examples (2010 and 2012):
http://www.amcp.org/data/jmcp/593-604.pdf
http://www.ajpb.com/journals/ajpb/2012/ajpb_2012_nov/impact-of-specialty-pharmacy-on-treatment-costs-for-rheumatoid-arthritis
My understanding is that the second link was "sponsored" by Express Scripts.

One of the fundamental problems is that incentives are not optimally aligned for the different players: patient, pharmacy, PBM entity, pharma manufacturer, insurer and the prescriber. For example, stand-alone PBMs have incentives to raise price in order to "capture" larger rebates. Also, categories of patients may benefit from relatively new "disease-modifying" agents which are more expensive. Indiscriminate cost containment may prevent those patients from access to more costly medications that may reduce complications and follow-up visits (good for insurer, especially if profit motivated) and may decrease long term disability and improve capacity to work and quality of life (good for the non-profit organization like Kaiser or the government who may be the ultimate payer somehow).

At this point, for rheumatoid arthritis, as well as for many other diseases, a very significant portion of patients do not get the effective care they need or get inappropriate (and often costly) treatments.
https://www.volksgezondheidenzorg.info/sites/default/files/bombardier_2012.pdf

Interestingly, a lot of useful data is available and the future seems to lie in the organization of this data into guidelines and algorithms.
http://www.ajmc.com/journals/supplement/2014/ace017_may14_ra-ce/ace017_may14_ra-ce_owens_s145tos152?p=1

FWIW, I don't see a long term viable moat for stand-alone PBMs. Integration of the PBMs into the insurer would go along way in terms of incentive alignment. Traditionally, stand-alone PBMs have described a dual role: cost containment and strategies to improve management. This dual mandate makes more sense when the payer is part of the equation.
https://client-prod.optumrx.com/vgnlive/CLP/Assets/PDF/RADTMWhitePaperFINAL.pdf

Simple telephone follow-ups by a nurse (or soon an alexa-type personal assistant) to the patient to optimize appointments, patient education, timely referral to rheumatologist and compliance. My opinion is that the profitable disruptive edge lies in the optimization and coordination of care.

FWIW, I don't see a convincing advantage in the combination of pharmacies and insurers.

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Audio of Craig Phillips' talk yesterday...
https://app.voicebase.com/autonotes/private_detail/58549613/hash=bpyaZG1rZ2uWaZmWxmGWnZ2PnG2XlGZsaWqYkZqWlJRmyMmSl25na5psmJSU

https://twitter.com/bwadden/status/954475627809255424

Wadden Golf Academy @bwadden
Hey everyone, Joe Light is right here. I was there yesterday. The audio clip cuts off the last few questions. The final one was mine! I asked CP if we get to the August recess and no legislation is forthcoming, will you undertake administrative action. He said No! We will wait.
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Investment Ideas / Re: SRG - Seritage Growth Properties
« Last post by johnny on Today at 05:00:10 PM »
Great article, thanks. I take it as long as net income is negative, there is no obligation to pay any dividend.

The article asks a good question: why are some REITs so generous when they are not obligated to pay anything due to a negative net income, they pay something.

For example, SRG just floated a 7% preferred security to raise 70 to 100m. That is just a little under the dividend and operating partner unit distributions paid from inception to the end of 2017. If they didn't pay me a 2.8% dividend yield over this period, they could have paid me a 7% dividend by NOT taking this loan. Another way to look at it, if new redevelopment is yielding unlevered 10-11%, then every dollar of dividend paid seems a lower return than the company can generate with those funds. I don't get - in this particular situation anyway - why they pay a single penny in dividend when all of their return, debt and equity yields 7 to 10% and they are not obligated to pay anything until their taxable income turns positive.

Think this has been covered, but if there's a norm in REITspace for paying dividends, then the costs of violating the norm may be much higher than following it. If, for example, your no-distribution rationality results in a huge chunk of institutional buyers shunning your equity (for being a "broken" REIT), then the pricing penalty you suffer may be quite a bit larger (especially in a case like this where we -know- that the opportunities are going to require significant extra capital to execute on a favorable timeline).

Is it better to raise $3B over the next decade under the No Shun Condition, or is it better to have to raise $2.7B under the Shun Condition?

Not saying that this is the "correct" decision, but I think it's what is somewhere in the back of one's mind when they're testing the idea that they should exercise Perfect Rationality on what is, in the big picture, a relatively immaterial decision about the company's capitalization.
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Politics / Re: New California!
« Last post by rb on Today at 04:31:52 PM »
Sounds lovely!
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I bought a 996 (2003) turbo on the basis of it hitting the bottom of the depreciation curve in 2014, with some pricing upsides. It has since then flattened out but I spent on average 2-3k/year on maintenance/expensive one-off parts failing. But it is definitely fun though and rates were low (1.75%). I may refinance the car again now that it is mostly paid off.

This is what I did back in October. Purchased a 2003 996 with 50k miles - 6-speed manual transmission. While I don't expect appreciation, because I'm driving it as my primary, the expectation is that since it IS at the bottom of it's depreciation curve that I'll be able to sell it in 3-5 years for roughly 80% of what I paid for it with the reduction in value coming from the miles I'm putting on it (modest). It may turn out that buying the 15 year-old Porsche was cheaper than buying a nearly-new middle-of-the-line car. It remains to be seen.
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