Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: hellsten on August 11, 2012, 10:02:45 AM

Title: DJCO - Daily Journal Corporation
Post by: hellsten 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.
Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir 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.
Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir 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...
Title: Re: DJCO - Daily Journal Corporation
Post by: hellsten 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.
 
Quote
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.
Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir 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.
Title: Re: DJCO - Daily Journal Corporation
Post by: MrB 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?

Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir 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.
Title: Re: DJCO - Daily Journal Corporation
Post by: MrB 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?
Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir 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.
Title: Re: DJCO - Daily Journal Corporation
Post by: MrB 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.
Title: Re: DJCO - Daily Journal Corporation
Post by: txlaw on December 19, 2012, 08:40:38 AM
I own a bit of DJCO.

I have watched for a while but haven't really owned up until recently because it's so small and is quite illiquid relative to everything else I own, and because of the cigar butt nature of the traditional biz. 

However, I like how Munger and Co are taking advantage of low interest rates to buy a case management system provider that is at worst a cigar butt and, at best, a growth platform.  Moreover, I think there is residual value in the publication brands that is unlikely to be destroyed completely. 

Finally, I'm hoping that Mr. Munger is in some of the names I would hope he is in: WFC, BAC, BYD, etc.

Really more of an homage to Munger in my own portfolio.  A reminder in some sense.

Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir on December 19, 2012, 08:40:47 AM
I appreciate the response, if I understood correctly, you subtract out a MoS after you estimate the intrinsic value. I always thought of MoS as something you subtract out of NAV for asset plays, but for operating firms, do you need to subtract a MoS if you already estimate conservative cash flows? I hope I am making sense here.

You make a good point regarding its declining earnings. I'll instead capitalize 2M at 10% to get 20M, and add it to the 102M portfolio to get 122M. I suppose I am still under the target price....but it is much lower now. This is not counting portfolio appreciation thanks to Mr Munger.
Title: Re: DJCO - Daily Journal Corporation
Post by: MrB on December 19, 2012, 09:13:38 AM
I appreciate the response, if I understood correctly, you subtract out a MoS after you estimate the intrinsic value. I always thought of MoS as something you subtract out of NAV for asset plays, but for operating firms, do you need to subtract a MoS if you already estimate conservative cash flows? I hope I am making sense here.

You make a good point regarding its declining earnings. I'll instead capitalize 2M at 10% to get 20M, and add it to the 102M portfolio to get 122M. I suppose I am still under the target price....but it is much lower now. This is not counting portfolio appreciation thanks to Mr Munger.

I don't think there is a right or a wrong way, but I think it is very important to separate the two concepts. Intrinsic value is discounted cash flows and margin of safety is "excess margin" on top of the intrinsic value. Having said that, is there a difference between investor a. discounting at 20% and another discounting at 10% and requiring a 10% MOS on top of that?
I think the danger is not properly thinking through how you discount, whether you are getting MOS at a certain price and whether the combination gets you to your required return.

Applying that to DJCO then when paying x expecting y returns might imply Mr Munger needs to compound the portfolio at 15% where he might only have compounded by 16% historically. However paying x-10% expecting y might imply he has to compound at only 5% versus a historical 16%. So your MOS/certainty of hitting y increases significantly.

Another example; discounting a $10 cash stream at 10% leaves you no MOS if you want a 10% return as would paying $91 for a $100 asset.

Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir on December 19, 2012, 09:20:02 AM
I appreciate the response, definitely a lot to think about. I may exit this opportunity as it doesn't look nearly as attractive on second thought.
Title: Re: DJCO - Daily Journal Corporation
Post by: MrB on December 19, 2012, 09:58:46 AM
I appreciate the response, definitely a lot to think about. I may exit this opportunity as it doesn't look nearly as attractive on second thought.

I am not suggesting you should to that...just that one must think it through properly.
Title: Re: DJCO - Daily Journal Corporation
Post by: PlanMaestro on February 06, 2013, 11:28:01 AM
@alexrubalcava is tweeting the annual meeting with Munger. Looks like he is shredding the management of General Motors pre-bankruptcy.

https://twitter.com/AlexRubalcava
Title: Re: DJCO - Daily Journal Corporation
Post by: berkshiremystery on February 23, 2013, 08:27:41 PM
the investment portfolio of the DJCO continues to grow in the 4th qtr.,... currently at $114m AUM

the 10-Q is published...

http://www.sec.gov/cgi-bin/browse-edgar?company=Daily+journal+&match=contains&action=getcompany

------

I might add some interesting NAV table from GuruFocus.com, comparing DJCO vs BRK, FFH & Chou Funds

(http://s18.postimage.org/dakysx561/image.jpg)

Source: ---> http://www.gurufocus.com/news/158972/yesterday-is-history-tomorrow-a-mystery-now-djco-is-a-present

Title: Re: DJCO - Daily Journal Corporation
Post by: Parsad on February 23, 2013, 09:52:44 PM
Incredible!  And DJCO uses little to no leverage or float.  Just big swings at the right pitches.  Cheers!
Title: Re: DJCO - Daily Journal Corporation
Post by: SouthernYankee on April 02, 2013, 12:49:32 PM
Are there any lawyers on here who use the case management software owned by the Daily Journal?
Title: Re: DJCO - Daily Journal Corporation
Post by: ajc on July 23, 2013, 04:39:33 PM
Twenty-seven pages of detailed notes from the DJCO 2013 Annual Meeting. Thanks to ValueWalk for originally having posted these.

http://www.scribd.com/doc/126780797/Daily-Journal-Meeting-Detailed-Notes-From-Charlie-Munger (http://www.scribd.com/doc/126780797/Daily-Journal-Meeting-Detailed-Notes-From-Charlie-Munger)

Title: Re: DJCO - Daily Journal Corporation
Post by: ajc on July 23, 2013, 04:50:10 PM
Also, I know that berkshiremystery referenced this January piece on the previous page under that NAV growth image but I think it's worth a stand-alone post so I'm just going to take this opportunity to re-register it here:

http://www.gurufocus.com/news/158972/yesterday-is-history-tomorrow-a-mystery-now-djco-is-a-present (http://www.gurufocus.com/news/158972/yesterday-is-history-tomorrow-a-mystery-now-djco-is-a-present)
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on July 24, 2013, 07:28:03 AM
Are you guys concerned with succession for this company at all?

We talk about Buffett's age and succession issues but he is 82. Munger is a lot older at 89.
Title: Re: DJCO - Daily Journal Corporation
Post by: cubsfan on July 24, 2013, 07:40:37 AM
Charlie is the Chairman of the Board, not the CEO.
The others have been with the company a long time,
and probably have learned plenty.

Maybe the investment pool won't do as well, but
operations are in capable hands.
Title: Re: DJCO - Daily Journal Corporation
Post by: blainehodder on July 24, 2013, 07:51:32 AM
Are you guys concerned with succession for this company at all?

We talk about Buffett's age and succession issues but he is 82. Munger is a lot older at 89.

It wouldn't surprise me if this gets absorbed into BRK when Munger is gone.  Buffett has been buying up small cheap newspapers... Why not grab this as well?  The holdings are all Buffett holdings anyhow, or at least Buffett approved. The investments could be spun off and distributed or thrown in the BRK pile.
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on July 24, 2013, 08:45:12 AM
You guys helped bring attention to Charlie's investment acumen.  There is an article on him today on Bloomberg:

http://www.bloomberg.com/news/2013-07-24/munger-triples-publisher-s-value-with-panic-era-wager-on-stocks.html
Title: Re: DJCO - Daily Journal Corporation
Post by: ajc on July 24, 2013, 09:06:57 AM
You guys helped bring attention to Charlie's investment acumen.  There is an article on him today on Bloomberg:

http://www.bloomberg.com/news/2013-07-24/munger-triples-publisher-s-value-with-panic-era-wager-on-stocks.html

I really hope that's not the case and that it's just a coincidence.
Usually I wouldn't mind in the slightest that every Bloomberg reader got information about any of the great ideas on here, but this stock is so thinly traded I think I'd have much preferred if that story never got printed.

Ah well, hopefully it gets bumped down in a couple hours time and whoever read it starts thinking about the next bunch of shiny objects they see...

(Damn you Sanjeev for putting together such a widely-read and successful forum! *shakes fist angrily in the general direction of Canada*)
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on July 24, 2013, 09:14:16 AM
I remember when I first went to the DJCO's annual meeting, there was only 15 of us in a tiny conference room, and we would get Charlie all to ourselves for 2 solid hours.

Next year, it will be a zoo, thanks to Sanjeev and this forum, not to mention the aforementioned Bloomberg article. ;-)
Title: Re: DJCO - Daily Journal Corporation
Post by: Palantir on July 24, 2013, 09:16:29 AM
Sigh...sold too early. I hate myself.
Title: Re: DJCO - Daily Journal Corporation
Post by: ajc on July 24, 2013, 09:30:37 AM
I remember when I first went to the DJCO's annual meeting, there was only 15 of us in a tiny conference room, and we would get Charlie all to ourselves for 2 solid hours.

Next year, it will be a zoo, thanks to Sanjeev and this forum, not to mention the aforementioned Bloomberg article. ;-)

I'm glad at least one of us is enjoying this.
I'll be going back to slowly bashing my head against the desk and insulting myself now...
Title: Re: DJCO - Daily Journal Corporation
Post by: txlaw on July 24, 2013, 10:25:19 AM
I remember when I first went to the DJCO's annual meeting, there was only 15 of us in a tiny conference room, and we would get Charlie all to ourselves for 2 solid hours.

Next year, it will be a zoo, thanks to Sanjeev and this forum, not to mention the aforementioned Bloomberg article. ;-)

I'm glad I went this year!  Probably won't go next year now.
Title: Re: DJCO - Daily Journal Corporation
Post by: ajc on July 24, 2013, 11:04:47 AM
Are you guys concerned with succession for this company at all?

We talk about Buffett's age and succession issues but he is 82. Munger is a lot older at 89.

Just my 2 cents worth, but I think the succession issue here and at Berkshire might be somewhat overblown (and most likely a chance to add) which is why I think DJCO could be a compelling opportunity.

Basically, alot of folks (for obvious and natural reasons) are concerned that as Warren and Charlie get older the businesses they're most attached to lose x amount of value as soon as they bite the dust.

My take on this is that essentially that won't happen (at least for years and years). Firstly, succession is of huge importance at Berkshire and this has been repeated a million times but still the media aren't happy until they get a bloody piece of meat thrown in front of them and so the story that mostly gets written is one of confusion, secrecy, blah, blah, blah just like you'd expect from a bunch of speculators in any market.

I'm of the opinion that Warren and Charlie spend more time thinking about succession than any other two executives in America and yet they get pretty much zero credit for it. If you stop to consider it for a minute, here are two of the brainiest, hardest-working, most trustworthy and patient guys in business who have primarily studied risk/reward scenarios for their entire professional careers and yet we're supposed to take the word of someone who works on television or for the print media and has never owned or run a business in their lives over Warren and Charlie in regards to what arrangement will be best when it comes to succession. Seriously?

Look at any of their children who are really the ultimate example of succession. Any addicts, fiscaholics, losers or idiots? Not a single one that I know of.
Yet still, Joe or Joanne Smith at XYZ paper or the UVW television show knows best. All I'm saying is I don't buy it for a second. Anyone who reads what Warren and Charlie have to say about succession can see that they think about it and care about it more than anyone in the world and so to me the rest of the noise is just a bunch of completely tedious media-circus nonsense that bears no relation to the reality, basic capital allocation methodology and operating processes of the business itself.

In terms of specifics - I reckon folks need to seperate their thoughts on Warren and Charlie in terms of their age and abilities, from their ideas on the size of Berkshire and it's future growth potential. If Warren started making investment decisions for a new 100 million dollar publicly-traded company that he owned tomorrow and said he was only buying businesses on a 5 to 10 year timeframe who would be crazy enough not to invest with Buffett and a whole universe of securities to choose from?

I mean, damn! Here he is with money to cover any medical issue so say he has a decade left and really it would be like he was almost starting from scratch but with all the experience and knowledge that he has acquired over his lifetime. Plus, how likely is it that the stocks he chose with a 5 to 10 year horizon when he hypothetically reaches 91 would be crappy?
To me, you get 10 great years when he's alive and say another 5 (maybe even 7 or so) really good ones when he's dead - as the portfolio hasn't yet already been too drastically restructured by his replacement - while those final investments begin to deliver their true intrinsic value.

In my opinion, that is exactly what you have with the Daily Journal Corporation. 2/3rds of the original Buffett, Munger and Guerin investment team and Charlie (if we're being frank in our estimates) has 5 years left while Rick has 10 and so say for the next 10-15 years you have a small cap company with the stock portfolio and returns of one or two of the best investment officers you could ever hope for and it's doesn't seem to be selling at some crazy premium by any reasonable measure.

Add to that the possibility that Charlie might recommend or be asked to recommend a successor (Li Lu or some other competent individual would at least consider that role, I would suggest, as a mark of personal respect and/or honor) and that Charlie tends to be a more long-term buy and sit on your ass-type of investor than Warren maybe and there are a number of scenarios which could keep things going even beyond that 10-15 year point.

Otherwise, they could sell to Berkshire or wind-up or anything, but I for one highly doubt that DJCO will somehow fall apart (or start a huge restructuring or do a 180 on the investment portfolio) the day Charlie or Rick or Gerald dies simply because we know these guys are always thinking about the long-term and their families and their integrity and that it's very likely their chosen successors will be doing exactly the same thing too (even if for the media it's just one more chance to get the next disposable and completely sensationalist soundbyte).

Anyway, those are my thoughts. They could be incorrect, but in the end I think it's more likely that in terms of culture, investment policy and succession they'll turn out to be roughly right. 
Title: Re: DJCO - Daily Journal Corporation
Post by: LC on July 24, 2013, 11:52:51 AM
If succession is such a concern to shareholders, why not look at Warren's personal life. How much is he leaving to his children, again? Versus how much he is donating?

The man is such a stand-up human being, I would take his trust and advice over any person who has ever been employed by CNBC (and there are some very good, ethical people over at CNBC!). Just my two cents.
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on July 24, 2013, 02:12:41 PM
Thanks for your perspective, ajc, and others as well.
Title: Re: DJCO - Daily Journal Corporation
Post by: berkshiremystery on July 24, 2013, 06:02:07 PM
Another article from today about the DJCO...

Warren Buffett sidekick Munger creates a mini-Berkshire at Daily Journal
2013-07-24

http://blogs.marketwatch.com/thetell/2013/07/24/warren-buffett-sidekick-munger-creates-a-mini-berkshire-at-daily-journal/

Anyway,... I just wonder,... there is a similar small undiscovered type of DJCO gem in Canada. Well,... I would actually call it, a miniature baby-type of Fairfax,... the company owners have high integrity and here at the board it was mentioned only once. They are totally reclusive and shun the public light,... the company owners aren't interested in any publicity, so are the very few board members here that know them.
Title: Re: DJCO - Daily Journal Corporation
Post by: JBird on August 08, 2013, 01:58:17 PM
Nearly upchucked when I checked the price today.

If the investment portfolio is being valued at 100 cents on the dollar, the operating business, which earned $5.5 million last year, is valued at $100 million.
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on August 08, 2013, 02:07:07 PM
Isn't Charlie Munger amazing?  While we all are fawning over Buffett all these years, Charlie is quietly rebuilding another mini Berkshire. 

We all should have kept quiet about DJCO and not let the golden goose out of the bag.  Now, the whole freaking world knows about it.
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on August 08, 2013, 02:27:50 PM
Isn't Charlie Munger amazing?  While we all are fawning over Buffett all these years, Charlie is quietly rebuilding another mini Berkshire. 

We all should have kept quiet about DJCO and not let the golden goose out of the bag.  Now, the whole freaking world knows about it.

Well lots of people knew about Berkshire but still didn't jump on it anyways...(like myself!)
Title: Re: DJCO - Daily Journal Corporation
Post by: crastogi on August 08, 2013, 04:19:38 PM
Well, what do the knowledgeable members estimate the fair value of DJCO.  I bought it around 70 in jan 12, up a lot since. 
Title: Re: DJCO - Daily Journal Corporation
Post by: JBird on August 08, 2013, 04:46:12 PM
$100 million is a full valuation for a publishing business earning $5.5 million. In my view it's no longer undervalued.
Title: Re: DJCO - Daily Journal Corporation
Post by: bennycx on August 08, 2013, 04:51:29 PM
Just buy Wells Fargo ^^
Title: Re: DJCO - Daily Journal Corporation
Post by: crastogi on August 09, 2013, 08:13:13 PM
thanks all!
Title: Re: DJCO - Daily Journal Corporation
Post by: ajc on August 23, 2013, 02:10:19 PM
Fun article from Dealbreaker (also about Charlie and the SEC):

The SEC Thought Charlie Munger Was Hiding A Hedge Fund In Some Newspapers

"Here’s a neat little story from Bloomberg: Charlie Munger, Warren Buffett’s long-time right-hand man at Berkshire Hathaway, moonlights as the chairman of the board of a wee newspaper company called Daily Journal. Daily Journal owns a collection of newspapers so dull that they “specializ[e] in public notice advertising,” particularly notices of foreclosure sales. It also owns $128 million in marketable securities, virtually all of it ($121mm) in common stocks. This is noteworthy because, one, Charlie Munger is the one picking the stocks, and two, Daily Journal’s total book assets are only $173.8mm, its book equity is $106mm, and its market cap is around $190mm. For every dollar you invest in Daily Journal, you’re getting around 33 cents of foreclosure notices and 67 cents of Charlie Munger’s stock-picking. Charlie Munger’s stock-picking: pretty good, as it happens, and in any case a commodity that some people desire..."

http://dealbreaker.com/2013/08/the-sec-thought-charlie-munger-was-hiding-a-hedge-fund-in-some-newspapers/ (http://dealbreaker.com/2013/08/the-sec-thought-charlie-munger-was-hiding-a-hedge-fund-in-some-newspapers/)
Title: Re: DJCO - Daily Journal Corporation
Post by: wisdom on December 16, 2013, 01:08:46 PM
http://www.bloomberg.com/news/2013-12-16/munger-s-daily-journal-missessec-deadline-after-rally.html
Title: Re: DJCO - Daily Journal Corporation
Post by: racemize on February 11, 2014, 06:28:12 AM
13-F:

http://www.sec.gov/Archives/edgar/data/783412/000143774914001834/xslForm13F_X01/rdgit012814.xml

where I found it was posted:
http://www.rationalwalk.com/?p=13517
Title: Re: DJCO - Daily Journal Corporation
Post by: LC on February 11, 2014, 09:09:49 AM
Curious that there is no Costco in this portfolio.
Title: Re: DJCO - Daily Journal Corporation
Post by: Grenville on February 11, 2014, 09:19:25 AM
Curious that there is no Costco in this portfolio.

My guess is that Munger doesn't think Costco is cheap. Munger talks very highly of the company and is on the board. He owns shares that he received from being on the board.
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on February 11, 2014, 09:25:11 AM
13-F:

http://www.sec.gov/Archives/edgar/data/783412/000143774914001834/xslForm13F_X01/rdgit012814.xml

where I found it was posted:
http://www.rationalwalk.com/?p=13517


sweet, good find.

US banks for the win!
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on February 11, 2014, 09:34:26 AM
Great digging Racemize and thanks for sharing!
Title: Re: DJCO - Daily Journal Corporation
Post by: JBird on February 11, 2014, 09:48:44 AM
Well done Race, thanks.
Title: Re: DJCO - Daily Journal Corporation
Post by: dutchman on February 11, 2014, 10:00:34 AM
love that he loves bofa!  thought he might've preferred jpm.  thanks.
Title: Re: DJCO - Daily Journal Corporation
Post by: valueinvesting101 on February 11, 2014, 01:00:23 PM
http://www.bloomberg.com/news/2014-02-11/munger-s-daily-journal-discloses-stakes-in-bofa-wells-fargo.html
Title: Re: DJCO - Daily Journal Corporation
Post by: FiveSigma on February 11, 2014, 01:07:52 PM
Any news about this year's AGM?
Title: Re: DJCO - Daily Journal Corporation
Post by: cubsfan on February 11, 2014, 01:35:03 PM
Any news about this year's AGM?

Someone I know talked to the CFO - and until the filings are done, which may be several weeks, there
won't be a meeting scheduled.
Title: Re: DJCO - Daily Journal Corporation
Post by: cubsfan on February 13, 2014, 04:43:06 AM
Update on filings:

http://www.bloomberg.com/news/2014-02-12/buffett-s-pal-munger-heads-a-very-weird-company.html

Check out CEO's Salzman's job functions.
Title: Re: DJCO - Daily Journal Corporation
Post by: ECCO on February 13, 2014, 06:48:16 AM
Is there a way to know when or the price they have paid when they bought WFC and BAC?
Title: Re: DJCO - Daily Journal Corporation
Post by: gfp on February 13, 2014, 06:54:41 AM
He basically bought the Wells stock at the low tick in 2009.  Probably bought the BAC around the time Warren did, but I don't know.
Title: Re: DJCO - Daily Journal Corporation
Post by: rogermunibond on February 13, 2014, 07:01:59 AM
BAC was lowish too in the first q of 2012, not quite the low tick.
Title: Re: DJCO - Daily Journal Corporation
Post by: Grenville on February 13, 2014, 07:15:47 AM
Is there a way to know when or the price they have paid when they bought WFC and BAC?

All the info is now there for you to figure it out. Just look at the 10Q's, they disclose the cost base.
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on February 13, 2014, 09:07:17 AM
ECCO,

Charlie bought these bank positions back in 2009 time frame.  He bought most of his BYD positions in the summer of 2012.

I have been going to the DJCO annual meeting since 2009, and someone asked Charlie at the 2010 AGM as to how long it took him to decide to buy WFC, BAC and USB.  He quickly responded "2 seconds to come to that conclusion to those securities".  We were all guessing at that time that it was only WFC and BAC.  We are correct now, but I am glad to see he also bought USB.

Since he has added Posco into DJCO's holdings, you can take a guess as who helped Warren bought the Posco stake in the Berkshire portfolio a few years ago.  Charlie's influence on Warren mental model is pretty deep.

brker_guy
Title: Re: DJCO - Daily Journal Corporation
Post by: racemize on February 25, 2014, 06:11:52 AM
I remember when I first went to the DJCO's annual meeting, there was only 15 of us in a tiny conference room, and we would get Charlie all to ourselves for 2 solid hours.

Next year, it will be a zoo, thanks to Sanjeev and this forum, not to mention the aforementioned Bloomberg article. ;-)

Are there any notes available other than the 2013 one?  Not finding any online.  I'd like to add it to my Munger compilation.

And I'll once again request for anyone who's got the Munger partnership letters, it's one of the only things I'm missing...
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on April 17, 2014, 10:21:19 AM
I'm sure there has to be some talk regarding succession issues. Anything to share?
Title: Re: DJCO - Daily Journal Corporation
Post by: OracleofCarolina on May 12, 2014, 12:25:32 PM
8-K filed today

http://www.sec.gov/Archives/edgar/data/783412/000143774914008702/ex99-1.htm

no annual meeting date yet and the 13F-HR filed today shows no changes in the holdings
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on June 19, 2014, 03:15:37 PM
Wow!  DJCO is about to cross $200 per share mark.
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on June 19, 2014, 04:03:09 PM
Wow!  DJCO is about to cross $200 per share mark.

Yes...it went on an absolute tear the last month or so...
Title: Re: DJCO - Daily Journal Corporation
Post by: Vish_ram on December 31, 2014, 02:48:51 PM
why did this go up so much today? wow.

I noticed that Roseman Wagner Wealth Management  owns 17%. This firm is interesting. All they own is msft, brk, djco, wmt and ko.
Title: Re: DJCO - Daily Journal Corporation
Post by: benhacker on December 04, 2015, 11:42:18 AM
Is there anyone on here who is long DJCO?  Would love to hear why?  Seems tremendously overvalued and very easy to value or hedge.  But that has been the case for a while, curious if I am missing anything.
Title: Re: DJCO - Daily Journal Corporation
Post by: fareastwarriors on December 04, 2015, 11:47:27 AM
The Munger premium?
Title: Re: DJCO - Daily Journal Corporation
Post by: benhacker on December 04, 2015, 11:58:43 AM
Quote
The Munger premium?

Hence my comment about hedging, the portfolio is disclosed (or nearly completely disclosed)... not clear to me why a transparent portfolio that you can copy would trade for such a premium. (certainly some premium could exist)

But again, it has for a while.
Title: Re: DJCO - Daily Journal Corporation
Post by: Picasso on December 04, 2015, 12:02:15 PM
There isn't a lot of liquidity in DJCO.  Last time I priced shorting a stub the bid/ask was like 6%.  Sometimes the spread gets really wide and maybe it makes sense to do it then. 
Title: Re: DJCO - Daily Journal Corporation
Post by: notorious546 on December 14, 2015, 02:29:11 PM
Quote
Risks Associated with Our Holdings of Marketable Securities
 
A large portion of the Company’s assets is held in publicly traded securities, and the prices of those securities may decline.
 
As of September 30, 2015, the Company held marketable securities worth approximately $166,041,000, with an unrealized gain for financial statement purposes of $111,498,000. While this portfolio has enabled the Company to borrow on very favorable terms for the New Dawn and ISD acquisitions and to better compete for case management software opportunities that are usually limited to “large” firms, it is unusual for a public company to invest a significant amount of its available cash in the marketable securities of other public companies. The value of these securities could decline, which would adversely affect shareholders’ equity.
 
Also, as of September 30, 2015, the Company’s holdings of marketable securities were concentrated in just seven companies and included two based in foreign currencies. Accordingly, a significant decline in the market value and unfavorable changes in the foreign exchange rates of one or more of the Company’s holdings may not be offset by hypothetically better performance of other holdings. This concentration of risk may result in a more pronounced effect on shareholders’ equity.

http://www.sec.gov/Archives/edgar/data/783412/000143774915022202/0001437749-15-022202-index.htm

We know munger holds BAC, USB, WFC, PKX. What are the remaining three?

Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on December 14, 2015, 04:04:47 PM
one of the securities is the bonds of a US company purchased in 2009, the other two are foreign-issued equity securities (and, well there's this from the 10-K):

Quote
The fair value of the foreign marketable security held in South Korean Won was $8,694,000, and the adjusted cost was $10,977,000 as of September 30, 2015.... The fair value of the foreign marketable security held in Hong Kong Dollar was $26,355,000, and the adjusted cost was $9,697,000 as of September 30, 2015.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: brker_guy on December 14, 2015, 04:58:26 PM
The one in Hong Kong Dollar is BYDDF.
Title: Re: DJCO - Daily Journal Corporation
Post by: DollarKing on December 16, 2016, 12:30:14 PM
From this year's 10-k

The Company holds foreign marketable securities based in South Korean Won and Hong Kong Dollar that are subject to risk associated with changes in the exchange rates of these currencies against the United States Dollar. The fair value of the foreign marketable security held in South Korean Won was $12,667,000 with an adjusted cost of $14,810,000 and $8,694,000 with an adjusted cost of $10,977,000 as of September 30, 2016 and 2015, respectively. The exchange rate of the South Korean Won against the United States Dollar was $0.00091 and $0.00084 at September 30, 2016 and 2015, respectively. The fair value of the foreign marketable security held in Hong Kong Dollar was $32,814,000 with an adjusted cost of $9,697,000 and $26,355,000 with an adjusted cost of $9,697,000 as of September 30, 2016 and 2015, respectively. The exchange rate of the Hong Kong Dollar against the United States Dollar was $0.12893 and $0.12903 at September 30, 2016 and 2015, respectively.


Anybody know what was the Korean stock purchased?

(The extra $3,833,000 Korean stock purchase between 1st Oct - 31st Dec 2015, with the corresponding values now at DJCO fiscal year end, shows it can't be Posco)
Title: Re: DJCO - Daily Journal Corporation
Post by: aceskc on December 18, 2016, 10:12:22 PM
Is it Posco PKX?
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on December 19, 2016, 06:32:51 AM
Is it Posco PKX?

I don't think so.   Since the second buy, its last 4 quarter-end closing prices (005490.KS) converted from KRW to USD don't match the change in quarter-end fair value (in USD) of the Korean holding in DJCO's portfolio.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: DollarKing on June 07, 2017, 06:15:53 AM
Looks like the other Korean stock may well be: ILSUNG PHARMACEUTICAL.
Title: Re: DJCO - Daily Journal Corporation
Post by: WneverLOSE on June 07, 2017, 07:05:59 AM
Looks like the other Korean stock may well be: ILSUNG PHARMACEUTICAL.

How are you able to determine this ?
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on June 07, 2017, 07:12:18 AM
Quote
Looks like the other Korean stock may well be: ILSUNG PHARMACEUTICAL.

Doubt it - the math doesn't look to me like it works when comparing its quarter-end prices (adjusted for KRW/USD FOREX) to the quarter-end fair value of the common stock portfolio (ex-the fair values of the remaining known holdings).

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on June 07, 2017, 10:25:37 AM
My own thesis is that DJCO owns some Hyundai preference shares (005389.KS).

DJCO holds six common stocks (the 10-K mentions investments in seven companies, but one of the holdings is in a debt security).  Four are listed on a US exchange and disclosed every quarter in DJCO's 13F-HR (WFC, USB, BAC and PKX).  The other two are foreign securities -- one listed in Hong Kong, the other in South Korea.

We know that the marketable security listed on the Hong Kong Exchange is 1211.HK (BYD Company).  This can be proved in many ways -- but the easiest is by using the information DJCO provides in its foreign currency risk disclosure from its 10-K.  Since, the cost basis doesn't change, DJCO did not buy or sell any shares over this period.  Thus, by comparing the closing quarter-end fair market values of the holding with the closing quarter-end price of 1211.HK (all converted to HK Dollars) we get a match.   (Another way is to compare the quarter-end fair market value of BRK Energy's holdings of 1211.HK in USD with imputed quarter-end fair market value of DJCO's Hong-Kong listed security - they index identically).

                 (http://i64.tinypic.com/vz7ec5.jpg)

By using the quarterly fair values for the US-listed stocks from the 13F-HRs and imputing the fair value for DJCO's holding of 1211.HK, we can back into the quarterly fair value of the Korean holding.  As an example here is the imputed value for 6/30/15:

                      (http://i68.tinypic.com/2l9h637.jpg)

Here are the quarterly estimated fair market values for the first batch of the Korean security (from 12/31/14 to 9/30/15 - Munger then appears to have purchased more of this Korean security).  I've tried matching the changes in quarter-end values with a number of Korean-listed stocks and I've come up with the best candidate to be Hyundai Motors preference shares (005389.KS). 

                      (http://i63.tinypic.com/t0kjvc.jpg)

The differentials are 1% or less in each quarter.  I've tried many other Korean shares and nothing seems to come as close (though there may be some I haven't tried.)  For example, Ilsung Pharm 003120.KS would index at 100%, 102%, 115%, 87% respectively from 12/14 to 9/15. 

There's some circumstantial evidence why Munger might own Hyundai.  He's been very complementary of South Korea's rise as a manufacturing power and used examples of their automotive industry's passionate embrace of Statistical Quality Control methods as a key to their success.  In addition, Munger is close to Li Lu of Himalaya Capital.  Lu made a presentation in 2013 highlighting Korean preferreds (they're actually non-voting common equity) and their discount to the underlying common shares of the same company.  Shortly thereafter, Munger makes his investment in this specific Korean "preferred".

Of course, this is my theory and I could be wrong or made a math mistake.  Feedback welcome.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on June 07, 2017, 11:48:52 AM
sorry for the long posts....

After re-setting the benchmark to 12/31/15 because Munger bought another slug of the Korean marketable security, we can re-run the index using the fair market value at Dec 31st, 2015. 

                 (http://i64.tinypic.com/116p5pi.jpg)

The Hyundai Motor shares (005389.KS) still track the DJCO Korean investment pretty well, I think.  Munger bought more common stock during the quarter ending 12/31/16 but its too early to make any decisions about that one yet.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on June 08, 2017, 10:02:30 AM
one last post -- I promise  :)

In an earlier post, I used a backed-into number for 1211.HK (BYD Company) in order to discern the market value of the Korean marketable security.  I thought I'd offer some additional circumstantial evidence to back up what I think everyone here probably already knows -- that the Hong Kong listed common stock owned by DJCO is BYD.  There was a period after DJCO started to publish its 13Fs starting with the quarter-ending 12/31/13 and continuing until the quarter before Munger made the Korean-listed stock purchase that we can use publicly reported info to backsolve the fair value of the foreign-listed stock.

I then indexed the change in value to BRK Energy's public disclosures in its 10-Qs, 10-K for the same period of its market holding of BYD.

               (http://i64.tinypic.com/2i2g5s.jpg)

I think that's a pretty good match and using the closing values and stock price, it looks highly likely that DJCO owns approximately 5 million shares of BYD Company shares listed on the Hong Kong exchange. 

Sorry if this is old news but its my working assumption that DJCO's six common stock holdings are WFC, USB, PKX, BAC as well as BYD Company in Hong Kong and Hyundai Motor Co Ltd, Pfd Series 3 in South Korea.  Of course I could be wrong.

Feedback always welcome,

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: DollarKing on June 08, 2017, 12:31:27 PM
Wabuffo -the maths looks spot on. I've got 4.95m BYD too. It's definitely not Ilsung, (I'll save my blushes and not describe the error I'd made.)
Hyundai Motors preference shares do look like the perfect candidate.
Nice work.
Title: Re: DJCO - Daily Journal Corporation
Post by: SlowAppreciation on July 11, 2017, 08:55:39 AM
http://minesafetydisclosures.com/blog/2017/7/11/2017-daily-journal-annual-meeting-qa-with-charlie-munger-part-2
Title: Re: DJCO - Daily Journal Corporation
Post by: DooDiligence on August 12, 2017, 07:00:37 AM
Cool story!

We should start seeing a lot of new newspapers popping up around the country now?

http://dealbreaker.com/2013/08/the-sec-thought-charlie-munger-was-hiding-a-hedge-fund-in-some-newspapers/
Title: Re: DJCO - Daily Journal Corporation
Post by: redhots on December 14, 2017, 10:45:52 AM
10K is out
https://www.sec.gov/Archives/edgar/data/783412/000143774917020645/djco20170930_10k.htm

Looks like they bought more BYD at ~43 HKD.
Title: Re: DJCO - Daily Journal Corporation
Post by: Cevian on February 02, 2018, 03:18:03 PM
Anyone going to the meeting? This will be my first year attending so would be good to get together with a few like minded investors ahead of time. Let me know if you're in town on the evening of the 13th.
Title: Re: DJCO - Daily Journal Corporation
Post by: alexbossert on February 07, 2018, 09:33:20 AM
I organized a dinner the evening before this year's meeting. It would be great to see all of you there.

Tue, February 13th, 2018
5:30 PM – 8:30 PM PST
$37 per person - please come with cash

Eat.Drink.Americano
923 East 3rd Street
Los Angeles, CA 90012

If you plan to attend the dinner, please RSVP so I can make sure there is enough space for everyone.  The room I rented will have 25 chairs and does not have space for any more. If you show up without having RSVP'd there will not be a chair for you.

RSVP:
https://www.eventbrite.com/e/daily-journal-value-investing-dinner-tickets-42948354685

Alex
Title: Re: DJCO - Daily Journal Corporation
Post by: valueinvesting101 on May 29, 2018, 03:39:17 PM
From latest 10-Q:

Quote
As of March 31, 2018, the Company performed an evaluation for an equity security with a fair value below cost to determine if the unrealized loss was other-than-temporary. This evaluation considers a number of factors including, but notlimited to, the length of time and extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer and the Company’s ability and intent to hold the security until fair value recovers. The assessment of the ability and intent to hold this security to recovery focuses on liquidity needs, asset/liability management objectives and security portfolio objectives. Based on the result of the evaluation, the Company concluded that as of March 31, 2018, the unrealized loss related to an equity security it owns was temporary.

Is it referring to BYD? Does fair value here mean market value?
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on May 29, 2018, 04:08:26 PM
Nope - its the other foreign security (denominated in South Korean Won).  If fair value (ie market value) is persistently below DJCO's cost basis in the security, it must perform this test in order to decide whether to mark down its cost basis (from a GAAP perspective).   

That foreign security has been trading below cost basis for almost the entire time that its been in DJCO's portfolio.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: Mephistopheles on May 29, 2018, 04:29:31 PM
Do we know what the foreign security is? Or is that a secret? Not Posco right?
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on May 29, 2018, 07:53:14 PM
Do we know what the foreign security is? Or is that a secret? Not Posco right?

Well - DJCO does own a tiny bit of Posco ADRs - that's reported on the 13F-HRs that the Company files.  But that's technically an American listing. 

We don't know for sure what the South Korean security is, and the Company hasn't said officially.  It's tricky - but if you use quarter-end closing prices and official USD/KRW quarter-end foreign exchange rates, I think it is a Hyundai Preferred (005389.KS).   Munger's private money is managed by Li Lu who had talked publicly about investing in a basket of Korean Preferreds (technically non-voting common shares) because of their big discounts to the underlying voting common shares.  It might be where Munger got the idea.

But that's a guess on my part and I could be wrong.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on December 13, 2019, 08:57:29 AM
With another DJCO 10-K just out yesterday, I added the data from its "foreign currency risk" section on the security owned in South Korean won and updated my table to figure out what Charlie Munger owns.  The math continues to work that it's the stock of Hyundai "Preferred" (005389.KS) on the KSE.

(https://images2.imgbox.com/49/31/jCbmaZT3_o.jpg)

It has not worked out great for him so far.  He spent $14.8m for his stake over 5-6 years ago - but its only worth $9.4m (as of end of Q3, 2019 - fair value of $9.2m today).

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: cubsfan on December 13, 2019, 10:10:44 AM
Thanks for your work Wabuffo - isn't there a large dividend attached with that security?

Does your estimate include the accumulated dividend?
Title: Re: DJCO - Daily Journal Corporation
Post by: wabuffo on December 13, 2019, 12:01:26 PM
Thanks for your work Wabuffo - isn't there a large dividend attached with that security?

I don't follow Hyundai closely.  I think there is a dividend - maybe ~5% yield (?).   Despite the name "preferred" - this security is more similar to a non-voting class of common shares.

wabuffo
Title: Re: DJCO - Daily Journal Corporation
Post by: kiwing100 on February 12, 2020, 10:06:08 PM

DJCO AGM on 12 Feb 2020

Q&A session

https://youtu.be/HS8neXkNnhw?t=941