Author Topic: DJCO - Daily Journal Corporation  (Read 48213 times)

hellsten

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DJCO - Daily Journal Corporation
« on: August 11, 2012, 10:02:45 AM »
Latest 10Q is out:
http://www.sec.gov/Archives/edgar/data/783412/000143774912008166/djc_10q-063012.htm

Quote
In February 2009, the Company purchased shares of common stock of two Fortune 200 companies and certain bonds of a third, and during the second and the third quarters of fiscal 2011, the Company bought shares of common stock of two foreign manufacturing companies.  During the first quarter of fiscal 2012, the Company bought shares of common stock of another Fortune 200 company.  During the third quarter of fiscal 2012, the Company purchased additional shares of common stock of one of the foreign manufacturing companies in which it had previously invested.  The investments in marketable securities, which cost approximately $45,121,000 and had a market value of about $94,831,000 at June 30, 2012, generated approximately $1,451,000 in dividends and interest income during the nine months ended June 30, 2012, which lowers the effective income tax rate because of the dividends received deduction.  As of June 30, 2012, there were unrealized pretax gains of $49,710,000 as compared to $24,532,000 at September 30, 2011. Most of the unrealized gains were in the common stocks.

As noted above, however, the investments are concentrated in just six companies.


Palantir

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Re: DJCO - Daily Journal Corporation
« Reply #1 on: September 14, 2012, 04:04:53 PM »
Anyone else long DJCO? I went in at 85, I feel the firm is undervalued on an basis of investment portfolio + business. On top of that significant capital appreciation to be expected in portfolio.
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Palantir

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Re: DJCO - Daily Journal Corporation
« Reply #2 on: November 01, 2012, 02:03:31 PM »
Damn, this thing bounced 13% today. I'm on fire bitchez!!!!!!!!!!!!......I mean, I don't care about short term movements, I'm focused on the long term...
« Last Edit: November 01, 2012, 02:05:36 PM by Palantir »
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hellsten

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Re: DJCO - Daily Journal Corporation
« Reply #3 on: December 15, 2012, 12:00:36 PM »
Latest 10-K:
Quote
During fiscal 2012, the Company's cash and cash equivalents, U.S. Treasury Bills and marketable security positions increased by $31,667,000.  Cash and cash equivalents and U.S. Treasury Bills were used primarily for the purchase of marketable securities of $20,961,000 and capital assets of $372,000 (mostly computer software and office equipment).  In February 2009, the Company purchased shares of common stock of two Fortune 200 companies and certain bonds of a third, and during the second and the third quarters of fiscal 2011, the Company bought shares of common stock of two foreign manufacturing companies. 
Quote
During the first quarter of fiscal 2012, the Company bought shares of common stock of another Fortune 200 company.
 
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During the third and the fourth quarters of fiscal 2012, the Company purchased additional shares of common stock of one of the foreign manufacturing companies in which it had previously invested.
  The investments in marketable securities, which cost approximately $49,692,000 and had a market value of about $102,156,000 at September 30, 2012, generated approximately $1,967,000 in dividends and interest income, which lowers the effective income tax rate because of the dividends received deduction.  As of September 30, 2012, there were unrealized pretax gains of $52,464,000 as compared to $24,532,000 at September 30, 2011.  Most of the unrealized gains were in the common stocks.  During the first quarter of fiscal 2013, the Company borrowed $14 million to purchase all of the outstanding stock of New Dawn and pledged its marketable securities to obtain favorable financing.

Did Munger buy BYD? My guess would be yes.

Palantir

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Re: DJCO - Daily Journal Corporation
« Reply #4 on: December 19, 2012, 07:32:53 AM »
Anyone else owning this? I bought this simply as an asset play, figured 100M+ portfolio plus 6M+ in cash flow year after year made it a good value at 115M....but Mr Market has not come around to agreeing with me. Might wait a few more mos to see what happens.
« Last Edit: December 19, 2012, 07:34:46 AM by Palantir »
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MrB

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Re: DJCO - Daily Journal Corporation
« Reply #5 on: December 19, 2012, 07:39:40 AM »
Anyone else owning this? I bought this simply as an asset play, figured 100M+ portfolio plus 6M+ in cash flow year after year made it a good value at 115M....but Mr Market has not come around to agreeing with me. Might wait a few more mos to see what happens.

Let me ask you a question.
a. How much would you pay for a $100 bill plus $6 annual cash flows?
b. Based on your answer in a., what is your expected return on that investment?


Palantir

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Re: DJCO - Daily Journal Corporation
« Reply #6 on: December 19, 2012, 07:44:53 AM »
I would pay no more than 160M....I agree it is undervalued.....I don't want it to stay undervalued. :'(

^This buy and hold thing is painful.
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MrB

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Re: DJCO - Daily Journal Corporation
« Reply #7 on: December 19, 2012, 07:50:58 AM »
I would pay no more than 160M....I agree it is undervalued.....I don't want it to stay undervalued. :'(

^This buy and hold thing is painful.

What kind of returns do you expect to generate over a five year period if you pay $160?

Palantir

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Re: DJCO - Daily Journal Corporation
« Reply #8 on: December 19, 2012, 07:53:09 AM »
Roughly slightly less than 10%. That's the max I would pay btw, I paid actually 115M, so basically I was paying 10M (115Mcap-105M Portfolio) for 6M-ish in FCFE.
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MrB

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Re: DJCO - Daily Journal Corporation
« Reply #9 on: December 19, 2012, 08:18:52 AM »
Roughly slightly less than 10%. That's the max I would pay btw, I paid actually 115M, so basically I was paying 10M (115Mcap-105M Portfolio) for 6M-ish in FCFE.

The way I would view it is slightly different. Capitalizing $6 at 10% assumes DJCO will earn $6 for 100 years, which is a high bar for a company with financials' which suggest it is going the other way. I would apply a much higher rate. Not lower than 15%. I would give the $100 a haircut too. That would mean I end up with an intrinsic value of $125 ($90 + $35) at the most. Then I still need to get a margin of safety of at least 10%, so let's say $110.

I don't dispute the value of $160, but I don't believe it has the required returns and margin of safety baked in, thereby implying that it is not a investment proposition at that price.
Price is what you pay and value is what you get with rate of return covering the ground in between.

Just a different view on what it is worth.