Corner of Berkshire & Fairfax Message Board

General Category => General Discussion => Topic started by: Ross812 on April 01, 2014, 11:32:08 AM

Title: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: Ross812 on April 01, 2014, 11:32:08 AM
Above are a collection of 96 companies recently discussed in the investment ideas forum and inclusions receiving two or more votes from board members in the last poll. I am going to continue dropping companies that received 0 or 1 vote in the last poll as ~10% consensus is needed before the idea is added to the portfolio. Each member gets 5 votes. Choose the companies you believe will have the best total return. The 15 companies (cash is an included asset class) with the most votes will be bought in the portfolio (balance stands at $1,196,000). Allocation will be determined by the number of votes each company receives.

The portfolio will be public for anyone to see at the following link:
https://docs.google.com/spreadsheet/ccc?key=0AivVdWOTQE2JdGQzYkFSQUg2eUR3UVRTcThFYWpBelE#gid=21

Since 19 August 2013 the fund with dividends and a 12.5% average cash allocation has returned 19.6% vs the S&P (with dividends) benchmark return of 15.2%.

Q1'14 saw nice gains due to SHLD (+36%), FIATY (+29%), and Packer's contribution of INLOT.AT gaining a respectable 16.5%. The forum failed to predict C would fail their stress test (-11%) and GM would have a major recall (-13%).

Thanks for voting all!
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: gary17 on April 01, 2014, 12:09:08 PM
Be interesting to see how the companies not voted into the fund performs in comparison to those that are voted in -- 

Gary
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: Ross812 on April 07, 2014, 06:49:37 AM
We need more than 82 votes!
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: giofranchi on April 07, 2014, 07:09:35 AM
Ross,
I am not sure I understand how this actually works: is the poll done on a quarterly basis? I am probably going to vote for the same 5 companies years in a row… What’s the meaning of expressing my vote each quarter? ???

Gio
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: Ross812 on April 07, 2014, 07:34:52 AM
Ross,
I am not sure I understand how this actually works: is the poll done on a quarterly basis? I am probably going to vote for the same 5 companies years in a row… What’s the meaning of expressing my vote each quarter? ???

Gio

Gio,

The voting is done on a quarterly basis. The 15 companies with the most votes are added to the portfolio and weighted by how many votes they received. Let's say between the top 15 companies there were 100 votes. If Lancashire had 15 of those votes, it would become a 15% position in the fund. This allocation can change each quarter depending on how sentiment changes over time. For instance when we started the poll in August of '13 SHLD was an 8% position. SHLD had a run up and was not as popular after the price had increased and it became a 5% position the next quarter. 3% of the previous position was booked as a profit.

Lancashire may be a company you vote on for the next 5 years regardless of price. I'm willing to bet the board would start to up vote Lancashire heavily if the share price falls to closer to book value. It may be a 3% position now with a core group of LT investors interested but could climb to a 10% position once the rest of the community piles on at a lower price. So far, the fund methodology appears to be working; ex cash the boards' picks are outperforming the S&P 500 by 10%.
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: constructive on April 07, 2014, 07:45:00 AM
Ross,
I am not sure I understand how this actually works: is the poll done on a quarterly basis? I am probably going to vote for the same 5 companies years in a row… What’s the meaning of expressing my vote each quarter? ???

Gio

If you look at voting trends you'll see that few people are as patient and concentrated as you are.

For example BH went from 7 votes to 2, 3, and 1, despite the success of the investment in CBRL and the acquisition of an insurance company.

Fairfax went from 41 votes to 19, 12 and 7 as the market marched higher.

Your job is to act as a counterweight to all of our votes.  :)
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: giofranchi on April 07, 2014, 07:50:38 AM
Gio,

The voting is done on a quarterly basis. The 15 companies with the most votes are added to the portfolio and weighted by how many votes they received. Let's say between the top 15 companies there were 100 votes. If Lancashire had 15 of those votes, it would become a 15% position in the fund. This allocation can change each quarter depending on how sentiment changes over time. For instance when we started the poll in August of '13 SHLD was an 8% position. SHLD had a run up and was not as popular after the price had increased and it became a 5% position the next quarter. 3% of the previous position was booked as a profit.

Lancashire may be a company you vote on for the next 5 years regardless of price. I'm willing to bet the board would start to up vote Lancashire heavily if the share price falls to closer to book value. It may be a 3% position now with a core group of LT investors interested but could climb to a 10% position once the rest of the community piles on at a lower price. So far, the fund methodology appears to be working; ex cash the boards' picks are outperforming the S&P 500 by 10%.

Ah! Ok! Now I get it!

Thank you,

Gio
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: giofranchi on April 07, 2014, 07:52:43 AM
If you look at voting trends you'll see that few people are as patient and concentrated as you are.

For example BH went from 7 votes to 2, 3, and 1, despite the success of the investment in CBRL and the acquisition of an insurance company.

Fairfax went from 41 votes to 19, 12 and 7 as the market marched higher.

Your job is to act as a counterweight to all of our votes.  :)

 ;D ;D ;D

Sounds like I will go broke! ;)

Gio
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: constructive on April 07, 2014, 07:55:28 AM
With the C discount widening relative to BAC, the vote spread between them has narrowed considerably over the last 2 quarters.

74 : 6     12.3x
41 : 4     10.3x
87 : 20    4.4x
54 : 21    2.6x
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: Ross812 on April 08, 2014, 01:00:27 PM
The fund was updated today. Thank you to everyone who voted!

The Q2'14 Allocation is as follows:

Company   Allocation %   # of Votes   % of Votes
BAC                 13.59%     56             39%
$ - Cash            11.41%    47             33%
FIATY               8.98%     37              26%
ALS.TO              8.74%    36              25%
BRK.B              7.77%     32              23%
GNMCA              7.52%   31             22%
LRE.L               7.28%    30              21%
SHLD               6.31%    26              18%
AIG                 6.07%    25              18%
C                    5.83%    24              17%
LUKOY             3.64%    15              11%
MKL                3.64%     15              11%
ZINC               3.40%     14              10%
AWLCF              2.91%    12              8%
FFH.TO              2.91%    12              8%
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: constructive on April 08, 2014, 04:07:25 PM
Here's a visualization of COBAF Fund vote share over time.
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: gary17 on April 08, 2014, 04:33:53 PM
what a nice abstract painting!!
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: sleepydragon on April 08, 2014, 06:21:40 PM
how to vote?
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: kmukul on April 08, 2014, 08:41:32 PM
Is this a real fund i can buy? Unfortunately i cant buy pabrai or sanjivs fund
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: dpetrescu on April 08, 2014, 10:02:38 PM
So really? No one voted for GM? It's 15% off! is everyone waiting for Black Friday deals?
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: Ross812 on April 09, 2014, 05:36:39 AM
So really? No one voted for GM? It's 15% off! is everyone waiting for Black Friday deals?

Actually, GM received 12 votes like AWLCF and FFH.TO. In the event of a tie, I've been using excels random number function to pick which company is added or eliminated. In this case, GM drew the short straw. View the fund with the link and look at the 'Allocation by Quarter' tab to view voting history.

Is this a real fund i can buy? Unfortunately i cant buy pabrai or sanjivs fund

kmukul,

The fund was created in an attempt to test out how a Corner of Berkshire and Fairfax crowd sourced fund would perform. The methodology certainly isn't perfect, but it is a work in progress. Once I have a year or two of data, I may back test a few different methods to refine portfolio weightings. If the portfolio continues to do well, I'll start a covestor  model portfolio (http://covestor.com/) to allow others to invest along side if they wish. Profits from management fees would be donated.

Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: sleepydragon on April 09, 2014, 05:55:06 AM
no tesla. haha.
and this vote has a long bias.
should allow people cast negative votes and then take the sum for each stock.
you can also try long the top highest voted and short the lowest voted.
but where can I vote? too late this year ..
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: Ross812 on April 09, 2014, 06:19:09 AM
no tesla. haha.
and this vote has a long bias.
should allow people cast negative votes and then take the sum for each stock.
you can also try long the top highest voted and short the lowest voted.
but where can I vote? too late this year ..

Voting just closed yesterday. I post the poll and it is open for 7 days at the start of each quarter. The poll does have a long basis and I do leave obvious shorts (Tesla in the last round of voting) off the poll. The reason there are no shorts included is because there are not too many shorts discussed on the board; a company receiving 0 votes doesn't mean it is a short or even a bad pick, it just doesn't have the community's following. Also, the accounting, borrow rates, and the assumption shares are even available for shorting is very difficult to track on a google spreadsheet.   
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: watsa_is_a_randian_hero on April 09, 2014, 06:35:27 AM
I didn't vote as for whatever reason one of the only stocks I posted about this quarter (ATW) was not included as an option.
Title: Re: Corner of Berkshire & Fairfax Fund - Poll Q2'14
Post by: ajc on April 09, 2014, 06:56:34 AM
I didn't vote as for whatever reason one of the only stocks I posted about this quarter (ATW) was not included as an option.

If you let Ross know, he'll just add the name to the list. I'm pretty sure that happened last quarter.