Magic: The Gathering or Stocks?

Last week I posted about Lego’s 7,500+ Piece Millennium Falcon set. You can find one for about $1,000. While on the topic of shopping, I just saw a set of Magic: The Gathering cards going for $199,998 on Ebay. I don’t know anything about the game and I’m not qualify to provide any insights on the cards. However, I do know something about investments and this sounds like a lot of money for a bunch of playing cards. I remember seeing people playing in the 90s, who knew that your cards would be worth something one day? I know that rare things could be worth of money over time, but I had no idea that very expensive playing cards were a thing. For the people who bought packs when it was cheap, good for them. I should have bought that instead of hockey cards. My hockey cards are worth as much as the paper it was printed on.

It’s hard to make sense of sound financial advice when you see things like that. If you want a successful retirement,  we are told to buy some stocks, some bonds, some gold, keep some GICs and invest in some non-correlated assets. We are constantly reminded about how important a diversify portfolio is.

Or you can forget about all that and buy Magic: The Gathering booster packs.

Magic The GatheringMagic The Gathering 2.JPG

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LEGO’s 7,500+ Piece Millennium Falcon

I just ran into this on the Internet and here’s a little weekend project in case you have lots of free time. It’s back in stock but they fly out of shelve very fast, explaining the $1,000+ going rate from resellers. It’s probably one of these collectibles, that if left unopened for a very long time, becomes their own retirement account over time.

LEGO has a 7541 Pieces Millennium Falcon on Amazon.

Image result for LEGO 7,500+ Piece Millenium Falcon

Is this the most expensive most Lego set of all-time?

In case you are wondering no I have never completed it and I don’t have it. But it’s cool.

Falcon pieces

Martin J. Whitman – Value Investor

Martin Whitman, an incredible value investor and teacher, passed away at 93 years old (Business Wire). Below are a short compilation of links on the value investing legend. The shareholder letters are great. I learned a lot from Martin. You can more investment wisdom by other great investors archived here.

“The financial world is so complex and unpredictable that a fair amount of our analyses will prove to have been flawed…. A dirt-cheap price is an anchor to windward against misperceiving current situations, or being unable to make accurate forecasts.”

—Marty Whitman

No Cash Left Behind

From the Onion.

*Please look up what The Onion is before sending me emails or commenting.

Greed is Good...

ECN Capital Preferred Shares Is Victim Of Collateral Damage

My latest article on Seeking Alpha is on the drop on value of ECN and its preferred shares on March 16th. It turns out that the drop in share prices has nothing to do with its fundamentals or any related bad news. Below is a short summary of the article. Full article at Seeking Alpha.


ECN Capital Preferred Shares Is Victim Of Collateral Damage

Reposted from Seeking Alpha
By Brian Langis

Summary

  • Both classes of preferred shares fell for unexplained reasons.
  • ECN preferred shares seem victim of collateral damage by the company’s association to Element Financial.
  • The recent selloff provides an interesting investing opportunity.
  • Both classes of preferred shares provide a yield of +7%. More upside once they reset.

 

ECN Capital (OTCPK:ECNCF) [TSX:ECN] is primarily traded on the Toronto Stock Exchange under the ticker ECN.

Note: Dollar amounts are in Canadian $ unless mentioned otherwise. USD-CAD 1.2839 Price of 1 USD in CAD as of March 23, 2018.

I just wanted to drop a short note on the ECN Capital (ECNCF, ECN.TO) preferred shares. Both classes of preferred shares have taken a hit on March 16, 2018. Why it happened is not exactly clear, and this article will dive into the possible causes. I’m not the first one to look at the unusual drop. KT Investments has his take on what happened to ECN Preferreds here. For a more in-depth analysis on ECN Capital, you can read my article here and the one by Montrealer.

In short, ECN is commercial finance company. ECN Capital operates in four verticals: Home Improvement Finance (Service Finance), Manufactured Housing Finance (Triad Financial Services), Rail Finance, and Aviation Finance. It is well managed and is led by Steve Hudson. Hudson’s focus on capital allocation has created value for shareholders, especially when he was the CEO of Element Fleet Management (OTC:ELEEF) (EFN.TO). Hudson eats his own cooking; he owns millions of shares of ECN. ECN is profitable and has plenty of assets to back the preferred shares.

The purpose of this article is to try to make sense of the drop of ECN Capital Preferred Shares Class A and C. ECN Capital Class A (ECN.PR.A) was trading above par back in November with a 52-week high of $26. It’s now down to $22.60. Class C was trading in the high $23 range for most of the year until recently. It’s now trading at $20.60 a share. ECN’s financials are fine, there wasn’t any bad news, and the rise in interest rates should benefit both classes of shares because of their fixed reset features. It’s worth pointing out that other fixed-resets preferred shares have been doing well. So what’s going on with the preferred?

First let’s look at the criteria of each class:

ECN Capital Class A – ECN.PR.A – Reset: Dec 30, 2021. (Issued November 2016) (Prospectus on SEDAR)

  • Shares Capital: 4,000,000 shares @ $25 for $100,000,000
  • 5 Yr Canada Gov Bond + 5.44%. Yield Floor: 6.50%
  • Price: $22.80
  • Current Yield: 7.17%
  • DBRS Rating: Pfd-3 (low)

ECN Capital Class C – ECN.PR.C – Reset June 30, 2022 (Issued May 2017) (Prospectus on SEDAR)

  • Share Capital: 4,000,000 shares @ $25 for $100,000,000
  • 5 Yr Canada Gov Bond + 5.19% Yield Floor: 6.25%
  • Price: $20.73
  • Current Yield: 7.51%
  • DBRS Rating: Pfd-3(low)

Both Class A and C took a tumble this month.

Li Lu – Himalaya Capital

Here’s the latest addition to my investment collection of useful resources. Li Lu manages Charlie Munger’s money and one of the candidate to manage part of the Berkshire Hathaway’s portfolio. He’s a very interesting investor to follow.

Li Lu (Himalaya Capital)

How to Evaluate Businesses

“So how do you really understand and gain that great insight? Pick one business. Any business. And truly understand it. I tell my interns to work through this exercise – imagine a distant relative passes away and you find out that you have inherited 100% of a business they owned. What are you going to do about it? That is the mentality to take when looking at any business. I strongly encourage you to start and understand one business, inside out. That is better than any training possible. It does not have to be a great business, it could be any business. You need to be able to get a feel for how you would do as a 100% owner. If you can do that, you will have a tremendous leg up against the competition. Most people don’t take that first concept correctly and it is quite sad. People view it as a piece of paper and just trade because it is easy to trade. But if it was a business you inherited, you would not be trading. You would really seek out knowledge on how it should be run, how it works. If you start with that, you will eventually know how much that business is worth.” -Li Lu

Li Lu is the only guy that manages Charlie Munger’s money. And he has an incredible story about his up bringing. Twenty-one years ago, Li Lu was a student leader of the Tiananmen Square protests. Now a hedge-fund manager possibly one of the successor to he is in line to become a successor to Warren Buffett at Berkshire Hathaway.

His book seems rare and hard to find. There’s a copy on Amazon: Moving the Mountain. He’s expensive so it’s probably one of these rare books that you might find by accident somewhere. Li Lu also wrote the foreword to the Chinese version of Poor Charlie’s Almanack.

 

California

Here’s my missive on my recent trip to California. Because of its large size, I decided to break down in different posts.

I spent two days in Los Angeles to attend Charlie Munger’s Daily Journal meeting and various related investment events. Then I headed to the San Francisco-Silicon Valley area to have a better understanding of what’s going on in that special part of the world. Here are the posts:

As always, your feedback is welcome,

Brian Langis

Alphabet (Google)

I use Google every day. I use its search engine, gmail, Youtube, Chrome, cloud, photos and calendar. My phone runs Android. Google organized my life. It’s hard to imagine a world without Alphabet-Google. Today, Google is a global icon that regularly pushes the boundaries of innovation in a variety of fields.

Google classic search

I had the chance to visit their campus. Google’s campus is famous. Google is well known for doing things differently. Not only it is an awesome working place, it is famous for throwing tons of perks at its employees. Free gourmet cafeterias, massage rooms, nap pods, haircuts and onsite. Why would a company offer so much? Well they want to keep their employees happy and productive. They put in 12-14 hours day and they need them at their best. It’s good to have your employees on site. I worked for a company that hired a catering service for lunch because leaving work site brings too many distractions. Another reason for the generous perks is that the Silicon Valley area is competing for their services. Their talent are highly sought after, not just in the Valley for everywhere in the world. The lesson here is to attract smart-creative people and give them an environment where they can thrive at scale.

Google organized the world’s information. This is an organization that has improved our lives. The world is certainly a better with Google. Alphabet’s business model is to collect data on users and sell that data for targeted ads. Alphabet, already one of the largest companies on the planet, seems to be defying the laws of physics by continuing to grow like a startup. Despite being over $100 billion, revenue is still growing at a rate of over 20% per year. Here are some financials: Continue reading “Alphabet (Google)”

San Francisco Bay Area – Silicon Valley

Perhaps the strongest thread that runs through the Valley’s past and present is the drive to “play” with novel technology, which, when bolstered by an advanced engineering degree and channeled by astute management, has done much to create the industrial powerhouse we see in the Valley today.

— Timothy J. Sturgeon

I didn’t have official business in the San Francisco Bay area but I wanted to go see for myself what is going on in this part of the world. There’s something truly unique going on there. I had to go. Some of the companies that have a major influence on our life are all located in the area. Silicon Valley, the nickname for the region, is populated with the Google, Apple, Facebook, Amazon, Netflix and Intel of the world. Even traditional brick and mortar businesses like Walmart have a presence with a tech lab. I don’t think we realize how much these companies have penetrated our daily lives. We use their products all the time. We use our iPhone to go on Facebook or Youtube. Google Maps to get around. On a flight, Netflix and the iPad are great at averting a kid crisis. Our methods of communication, work, and the way we get our entertainment are all in the hands of a couple companies. And is it a coincidence that they are all located in the same area? How did that happened?

Silicon Valley
Silicon Valley, California. Credit: Credit: Samykolon/Wikimedia Commons

Silicon Valley is a unique place. It’s a place of dreamers. The belief is that if you can think it, you can code it. And if you can code it, you can make products that will improve our lives. Silicon Valley has the ability of attracting the smartest brains. The region has everything to gets things done. Money is not an issue with its legions of venture capital funds looking to fund the next big revolutionary idea. Some of the best schools in the world, Berkeley and Stanford, are located there. It attracts and retains some of the smartest people in the world. Silicon Valley has created this virtuous circle of attracting money and brains that build companies that improve our lives. Continue reading “San Francisco Bay Area – Silicon Valley”