Category: Investing

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Fun Investing

Rough day and week, student loan forgiveness and math is brutal too

Reading Time: 2 minutes

First: I am happy to say the kids to back to school. In the last 2 weeks before school starts, some days Sophia really got bored, and she let me know that. She asked me to to buy the humming bird feeder, among other things.

I recall the days I shopped at Sears (hint, a while ago, not much since Sophia was born, aka from 2014).

https://twitter.com/JonErlichman/status/1563598300372254720

The stock marker of last Friday and the week can be better summarized in the two tweets below. I do understand the economy usually has cycles and the federal reserve has a tough job to balance the employment and inflation. But at the same time it seems sometimes things are so obvious and I just don’t understand how they could miss the most recent inflation cycle by dismiss it as “transitory”. They are paid to do that job. Or sometimes it’s the politics got in the way? Nobody wants to be the boy who cries wolf coming (and it turns out to be false).

https://twitter.com/WallStreetSilv/status/1563262458764046337

and this one on tech stocks in particular, as they are under assault from the fed raising the interest rate.

https://twitter.com/buccocapital/status/1563549513633386497

I noticed CNBC did another special Friday evening too. Personally I no longer pay attention like I did back in 2008/2009 the financial crisis days. Maybe a good sign as I no longer tune much into the “market turmoil” and I am more calm and doing my own research now.

https://twitter.com/CNBC/status/1165005039586500608

There are tons of tweets, and controversy on the federal student loan forgiveness. Legality, fairness etc. aside, personally I think it can potentially help out quite a few people, and many of them are hard working and earned this. One interesting and probably more meaningful policy is the capping of loan interest and payment tied to a person’s income. Also the WH “this you?” series of tweets.

https://twitter.com/WhiteHouse/status/1562916200866267138

And when I am searching through my tweets archive, I happened to find this one too.

https://twitter.com/stlplace/status/1528560337968152578

As I said in my previous post on compounding, the debt piled up via the snowball effect too. So anything we can do to minimize or reduce the debt, it could have impact on people’s real lives.

Separately, I had discussion with Serenity on student loan too: I said I will pay for her college.

Last but not least, I googled why there is no term limits to the legislators. It seems constitution related.

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Investing

Benson Hill $BHIL a food company

Reading Time: 4 minutes

(06-17-1023) (STL Business Journal) Matt Crisp, who co-founded Benson Hill, out as CEO of the publicly traded firm. Quote the article:

Crisp received total compensation of $17.1 million for 2022, including a base salary of $613,462 as well as stock awards and incentive plan compensation.

Benson Hill has recently enacted a “liquidity improvement plan” aimed at reducing costs and improving cash flow, with Benson Hill setting a target of achieving profitability by 2025. Initiatives that Benson Hill has outlined to improve liquidity include refinancing “high-cost” debt, trimming operating costs, staffing cuts, and exploring a possible sale of a soybean crushing facility it owns in Seymour, Indiana.

My quick comment: the CEOs got the usual gold parachute. For investors, not so much. Again quote: Since going public, Benson Hill has rapidly grown its revenue but has operated with losses. Its share price has also sagged since becoming publicly traded, down significantly from its starting point of $10 per share to close Thursday at $1.19 per share.

(05-11-2023) The Q1, 2023 results are here. It looks like they burned about $38 m cash. They still have about $110 liquidity (cash + marketable securities) per page 19. One thing I am not 100% is on page 20, they were saying “Cash, cash equivalents and restricted cash, end of period $ 41,107”, that cash equivalent may include “Current assets held for sale” in page 19. Anyway in about 2 to 3 quarters, they may run out of cash. It seems the stock rallied in last 2 days after earning report though.

(01-03-2023) The Q3 results is here. It looks like they burned about $49 m cash, and they have $30 m cash on hand. Keep in mind they came to market via SPAC and in last year or 2 SPAC bubble pretty much busted. Another example is Nextdoor ($KIND). Note the marketable security position is the same: still about $163 m. Also, it seems they may issue new shares down the road (quote from the Q3 release again): “The Company also filed a registration statement to put in place an At-The-Market (“ATM”) facility for up to $100 million. Once effective, the ATM facility is expected to provide additional flexibility to supplement the Company’s cash position over the next two to three years.”

(Update 09-20-2022) They released the q2 results. It looks like they burned about $50 mil cash in q2 and I also noticed they do have some marketable securities: worth $163 m. They also made an announcement on the ADM partnership news. I am staying away from them for now.

(Original 05-25-2022) They are across the street neighbor (linkedIn, web page, career page, current openings, Investor Relations, google finance stock).

Some readings

Latest 10-Q for the 3 months ends at 03/31/2022; investor presentation April 2022; investor presentation June 2021). They seems to have cash to sustain two quarters (source: from 10-Q page 8 we can see $53.2 m being used in operation in Q1, and they have $104 m cash on hand at the end of the Q.

Earning call transcript (seekingalpha)

“The total reported mark-to-market loss was approximately $13 million, with $5 million realized during the quarter for settlement of contracts corresponding to higher price sales in the quarter…Lastly, use of cash to fund our operations during the quarter was $53 million, which included a temporary timing effect of approximately $15 million for the margin calls on the mark-to-market losses in the quarter…” || #MajorsTake: it sounds like they are buying soy beans and do some food processing. Assuming they sold the processed material to the brand name or store name food makers. In terms of food chain (figuratively speaking) or business model, this is not the top of the food chain.

The PIPE news

It’s combined with the full year 2021 results news release, quote below: Today, Benson Hill also announced that it has entered into definitive agreements with certain investors for a PIPE (Private Investment in Public Equity) offering of common stock and warrants to purchase common stock, which delivered approximately $85 million in gross proceeds. The Company intends to use the proceeds from the transaction to help fund its ongoing business growth, namely in its Ingredients segment...

The definitive agreements define the issuance and sale of 26,150,000 units at a purchase price of $3.25 per unit in a private placement. Each unit consisted of one share of the Company’s common stock, par value $0.0001 per share, and a warrant to purchase one-third of one share of the Company’s common stock. In the aggregate, 8,716,661 shares of the Company’s common stock are underlying the warrants.

The warrants have an exercise price of $3.90 per share of common stock (subject to customary adjustments), were exercisable upon issuance, and will expire on March 25, 2027. Each warrant is redeemable by the Company for $0.10 upon the Company’s common stock trading greater than $9.75 per share for 20 of 30 consecutive trading days.

Impact of Russia / Ukraine war

Because both are main grain producer / exporter of the world, Benson Hill plant based food (mainly soy beans) seems poised to benefit from the war, ironically. “Benefit from war” is cringy to me, to say the least.

More info: Benson Hill | A SPAC to solve world hunger?!

2021 Letter to shareholder (dated 05/09/2022 by CEO Matt Crisp)

My comments: right now as of 06-08-2022, this is still on “too good to be true” or “too hard to understand” people. However, I am holding a small position and trying to understand it better.

“Founded in 2012 by two pioneering researchers in the photosynthesis field, Andrew Benson and Robin Hill, Benson Hill Biosystems is an agricultural solutions company dedicated to increasing crop yield primarily by increasing photosynthetic efficiency and carbon fixation. Benson Hill employs an integrated approach of computational and systems biology, bioinformatics, synthetic biology, and next-generation phenotyping, which afford it significant advantages in the field of intrinsic yield.” (source: BENSON HILL BIO INCREASES TOTAL FUNDING TO $34.7 MILLION)

Last but not least: couple YouTube videos below. The first one (business wire) sounds a bit like infomercials to me, when I watched it.

This one has a bit more analysis.

Overall, I don’t like companies used AI (artificial intelligence) and ML (machine learning) too much in its pitching deck. For that matter, big data, data science and in a promotional video.

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401k and Personal Finance Business Fun Investing Master Series

Weekend thoughts 05-07-2022: Berkshire Hathaway 2022 shareholder meeting

Reading Time: 5 minutes

I went to Omaha last weekend, left STL on April 29 Friday, attended meeting on April 30 Saturday, and left Omaha back to STL on May 1st Sunday. The full comment and Q&A session (including the actual shareholder meeting) is broadcasted by CNBC and available at YouTube.

Note when I drove to Omaha on Friday 4/29, the market was in a tail spin, and so did the market perform poorly this week. But at the Berkshire church, we are value investors, and we don’t care about the daily (weekly, monthly) fluctuations. I think with the modern technology (don’t recall exactly at which year Berkshire starts to broadcast its annual shareholder meeting), the technical side of things can be learned at the comfort of home. On YouTube there are a lot of materials on Warren / Charlie spoke at past shareholder meetings, such as this YAPSS channel, note there are others too including Warren and Charlie’s other talks especially to college students. The whole #BRK2022 meeting video is about 6 hours long, with the last hour being the official shareholder meeting, with questions related to shareholder proposal (somewhat politics related). One thing surprised me a bit is the tone of some of the shareholder proposal, and Buffett’s patience on answering some of those, such as this one at 5 hour 18 minutes mark of the video. My sense is very few CEO would have that kind of patience. This is shown in the Q&A part of the meeting as well, I imagine some of the questions have been asked again and again because they have done this probably for 20 years. But Charlie and Warren answered those regardless.

The movie at the beginning of the meeting: I noticed Susan Buffett (Warren’s daughter) is the executive producer, and it was fun to watch overall. It has some ads, as well as some old video clips such as Warren’s testimony during Salomon Brother crisis. Other notable things are the exhibits, which has things from Brooks Running, to Clayton homes (manufactured home), DQ, Netjets, See’s candies. The movie also showed all Berkshire managers including Ted and Todd (investing managers). Warren’s skit with Bill Murray was a bit interesting too (confuse Warren Buffett with Jimmy Buffett, the singer). I noticed Bill Murray is a BRK shareholder and recently he got into hot water. I was not 100% sure that Susan Buffett (or Warren Buffett) was taking a side here. Also I am not positive the movie is available online: this seems like one benefit that’s only available for shareholders attending in person. Overall I liked the movie especially on the side of “don’t take oneself too seriously”, “poke fun at self” (again Warren vs Jimmy Buffett) and so on. It’s a strength of American culture, as poking fun at politicians are allowed, sometimes I felt bad for Bill Clinton as I saw comedians and talk show hosts pounced on him all the time, but hey, why would he looked at Aliana Grande (who could be his grand daughter’s age) in such a creepy way. Okay I will back to the topic.

International audience: there are many international audience in person, as some may have see from the questions being asked, also I noticed in the hotel I stayed, there are quite a few private jet pilots. Maybe next time I will fly the private jet, instead of driving back and forth. Talking about driving, I was a bit tired on the way home, both due to the 5k I ran in the morning (the invest in yourself 5k), and also because of I was a bit sick coming in, plus I had a small incident on Saturday.

The incident was I messed up my only long pant in the morning when I was waiting outside CHI health center. The line was long at about 7:30 am, so I decided to go to the nearby hotel to see if I can use the restroom. It was a bit too late… thus on the rest of the day I only had a swimming trunk as my bottom. The temperature was in 50s that day, and people may think I am a runner or something. Yes I do run, but I would probably wear a long pant in that kind of weather. The lesson here is always have some margin of safety (room for error or unexpected), so I will bring an extra pants next time when traveling. Another lesson is try to look out for restroom in a new area, just in case, in this scenario it seems the nearest one is Marriott hotel across the street.

Some other odds and ends: I noticed there are a few homeless people near the downtown hotel I stayed. I stayed at the Hyatt Inn near old market in downtown Omaha. I also found a bit authentic Chinese restaurant (Blue and Fly) eventually, after eating ramens at two Japanese restaurants near downtown. I found and walked near the Berkshire HQ office as well. CHI Health center: it’s a big place, noticed they did not charge sales tax for See’s candies etc, don’t know why. But they don’t allow outside snacks or food, drinks in (to protect their concession sales). I did not bring much, but they threw away a few small snacks I bring in the case I don’t know where to get lunch. Warren said “midwestern time” instead of “US central time”. I noticed Gerald Ford, the former US president, was born in Omaha (saw a sign on highway on Ford). I think “midwestern value” can be seen in both in Omaha, and in Berkshire (Warren and Charlie). In addition to international audience, there are lots of domestic audience including US, midwest and Omaha residents too.

PS: this is my dream 16 years in the making. Back in 2006 I thought about going, but didn’t due to various reasons (maybe mostly financial). I am glad I am in a better position now 🙂 All in all, I like what I saw in this trip, and hope to visit sometime in the future too. If my kids and my wife can join, that will be even better.

Photos and video

Slideshow for 04-30-2022

Berkshire Hathaway HQ outside view

Tweets thread (Mine, Thomas Chua, The Rational Walk)

Planning trip

Past BRK Shareholder meetings (full sessions)

2020

2012

2011 (before 48 mins mark, there are quite a bit coverage on David Sokol. Tom Murphy: you can always tell a man go to hell if this is such a good idea. -Charlie Munger summed it well)

2005 (TIMESAVER EDIT – FULL Q&A) (Fun momemnts: at 43 minutes mark, a kid asked about See’s Candies and Petro China) (One hour 30 minutes: public school systems in Omaha) (2 hours mark: the comments on AIG and Hank Greenberg are interesting, as we know AIG blew up about 3.5 years later, amid 2008 financial crisis)

2001 (3 hours 54 mins mark: don’t go short. At 4:12 mark, Warren talked about California utility does not have incentive to produce more electricity due to new regulation. This sounds like what the US oil industry is doing in recent years. Note I am not taking sides on politics / climate change)

1999 (At one hour 4 minutes mark, shareholder asked about a question on Chinese stocks, Charlie commented “I don’t know much about China”. This is interesting, as Charlie grew closer to Li Lu in last 20 years or so, and Berkshire bought $BYD shares too. Also at one hour 8 minutes mark, “rich vs wealthy” is interesting.) (Books Charlie and Warren recommended: The Warren Buffett Portfolio, Titan the biography of the original John D. Rockefeller, Guns, Germs, and Steel,” which was a physiologist’s view of the economic history of man, The Wealth and Poverty of Nations.” And the guy’s name is [David] Landes; “Common Sense on Mutual Funds,” by Jack Bogle)

1998 (TIMESAVER EDIT – FULL Q&A, I just noticed all the TIMESAVER EDIT video have all the notes)

1997 (At 3 hours 28 minutes mark, an audience asked a Disney question which is relatable to today’s political environment. Buffett’s answer: I’m delighted to have my grand children expose to full range of #Disney products, and I love to take them to #DisneyLand #DisneyWorld, Disney movie and videos…I don’t have problem gays being employed (clap). Ditto here for me taking my kids to Disney. At 4 hours 19 minutes mark, the comments about McDonald’s are interesting.) || I just noticed the video has all the notes too, such as the McDonald’s vs Coca-Cola… this is excellent.

1996

1994

Last but not least, below is a tweet thread of interviews of “becoming Warren Buffett”, total 11 videos. I noticed YouTube (HBO) has a condensed version too (a documentary movie).

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401k and Personal Finance Fun Investing Life Tips Stocks

Berkshire Hathaway annual shareholder meeting 2022

Reading Time: < 1 minute

PDFs

Genenal info; Omaha visitor guide

Hotel (below is copied from the general info PDF above)

TRAVEL & HOTEL ASSISTANCE
If you need assistance in arranging lodging, we recommend contacting Travelink, American Express:
Travelink, American Express
Hotline: (866) 301-3011
(615) 277-5179 (Outside the U.S.)
Email: to teampearl@travelink.com


Hotels fill up fast, especially in the downtown area. There are many options outside of the downtown area that offer more competitive rates and conditions. Berkshire provides shuttles to many of these
locations and they might serve as a nice option to the higher priced downtown hotels.


VISIT OMAHA – Find hotels and view rates

Health info; note the Clear app and website (for health / vaccination pass)

Please note proxy material varies by broker: e.g., TD Ameritrade website, it’s under “My Account” => “History and Statements” => “Shareholder Library”, this is the direct link just in case. If you have multiple accounts with TD Ameritrade, please make sure you select the account that has $BRK.A or $BRK.B . Vanguard sends an email, and I have’t tried, but I believe if click on it. It will lead me to the proxy materials after I log into Vanguard website. This leads to the meeting credentials.

Meeting credentials: one shareholder can request at least 4 meeting credentials. And it can only be obtained by following the instructions laid out in the ami.pdf file (again it’s bundled in the proxy material above), and get it in mail.

Last but not the least, investinyourself5k

PS: I made the trip and wrote this blog post.

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401k and Personal Finance Investing

Weekly thoughts 12-16-2021

Reading Time: 2 minutes
  1. Looking at the 5, 10, and 20 years chart of $CAT, $LUV and $SPY, then $MA. It seems in 5 and 20 years, $CAT beats $LUV and $SPY, while the 10 year performance was the opposite. Note I haven’t counted the dividend (or dividend re-investing in all cases). Then when I put the $MA in play (note it only has about 15 year history in the market), the above 8,000% performance since its IPO dwarfs all the others. So in other words picking the winner over a long period of time still matters. Note $MA along with other high flyers such as $TSLA, $NVDA, $MSFT, $NFLX, and $MAZN are all doing very well in last 15 years. Note I used the chart functionality inside TD Ameritrade website.
  2. HSA may be a sleeper that a lot of people did not pay enough attention. I am going to be prepared when the S&P 500 index goes down, and switch some of my cash in HSA to the index fund.

3. $BRK.B break out $300 barrier the first time, and reached its all time high. One share of BRK b share is worth 1/1,500 of the A share, btw.

4. What’s the proper valuation for high growth saas stock. Recently I saw someone mentioned the PS ratio (price to sales, or market cap to revenue ratio) to be 1/2 of the revenue growth (year over year). So for example, if $ZM is growing at 20% year over year, we are willing to pay about $40 billion market cap (about $4 b revenue x 10).

5. #FinTwit. I found on twitter, that some people are just too emotional or personally attached to one specific stock or one sector (for example, saas). We need to be open minded if we want to be successful in investing. A good example again is Warren Buffett, a few years ago, he was probably 85, and he piled into Apple stock as he saw the opportunity there (he observed many iPhone is essential part of many people’s lives).

6. Robinhood or meme (or mean) stocks. I had a small position of $HOOD, and this past week the market was brutal to $HOOD, as it dipped below $20 the first time. I noticed that $AMC and other meme stocks rebounded on Friday, as did $HOOD. It sort of confirmed my speculation or hypothesis that $HOOD is a barometer of meme stocks ($GME, $AMC etc #stonks). I also noticed it benefited from the Dogecoin, but the Dogecoin faded away recently. Re: the crypto wallet and technology overall though, I believe $HOOD is much more sophisticated compared to $BKKT, which had rollercoaster ride in last 2 months. Bakkt holdings rewards and crypto wallet solution reminded me the cash app by $SQ (Square Inc, now Block), as I used the offer to get about $10 worth of Bitcoin so far. I am not a believer of Bitcoin or crypto btw.

7. Last but not least, the recent sharp down trend of Nasdaq high flyers, from the $DOCU medium cap #saas high growth to the big tech such as $TSLA, $FB, $GOOGL or $AMZN. I think once a stock in a downward cycle (the right side of the curve, if I may), and the trend is confirmed, the down cycle could continue for a while. The recent examples include 2000 dot.com crash and 2008 financial crisis (great recession). I understand right now we don’t know/. As the old saying does the hindsight is 20/20: we only know when we look backward.

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Investing

Stock lessons 2009/10: sold stocks for tax reasons

Reading Time: < 1 minuteSold stock ((NYSE:BEE) at a loss for tax deduction (in year end of 2009), but forgot to buy it back in Jan 2010. Now the stock doubled the price from where I sold it. I am not trying to predict the stock price in near term, or think “what if” from hindsight here. I think one key reason I did not hold the stock is still due to my ignorance: I don’t know how to value it (as REIT). I saw someone put an quite optimistic est. at around $2.50 in last Dec.

Back the topic, another reason I think I did not hold the stock is because it dropped precipitously in last Dec., and I started to sell some after initially bought quite a few shares. As I sold when the stock started bouncing, I sold too early. After a while I only have a few thousand shares, I sold them at around $2: thinking to take advantage of the loss for tax deduction, and hope to get back when the price drop again the the Jan.

But obviously I did not jump back to this bandwagon in Jan.

Think long term and trade less

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Investing

Investing lesson I in 2010: pharmaceutical stocks

Reading Time: < 1 minuteMaybe speculation lessons will be more appropriate. I bought 3 pharmaceutical stocks recently. With the outcome of MA senate race, US healthcare reform is unlikely be massive, which is good news for the pharmaceutical companies. I learned some lessons in the short span of trading small pharma stocks. I think it’s a good idea to summarize here:

1) Pay attention to the trial phase of drug under development: Typically the earlier in phases, the more risk, sounds simple both from common sense and probablity point of view. Apply this to real world, for Athersys (Nasdaq:ATHX) all drugs are in phase I or earlier. On the other hand, pSivida (Nasdaq:PSVD) has drugs are in all phases (from preclinical, phase I, II and III and marketed); 4 out of 5 drugs from Lexicon (Nasdaq:LXRX) are in phase II.

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Investing video

Why I don’t like Gold as long term investments?

Reading Time: < 1 minuteThe Gold has been doing very well lately, partly due to the depreciation of dollar, partly due to the fear of inflation, and last but not least, due to speculation. I think this Yahoo Tech-ticker interview explained why I don’t like Gold as long term investments very well. More importantly, it suggested alternative investments for gold.

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Investing

Check into Strategic Hotels and Resorts

Reading Time: 3 minutes(Update 21Oct09) Baird analyst downgraded BEE. The stock dropped quite a bit. Also, I found the web site of Vector Group Ltd here. Vector Group bought a 7.1% stake in BEE on July 8 (SEC filing here). Note the owners of BEE includes Bill Gates (via. his Cascade Investment). A Hotel REIT list.

(Original) Ticker symbol (NYSE:BEE), other hotel REITs for comparison: DRH, LHO.

Company web site. Note Bill Gates private investment fund bought a 5.6% stake on Oct. 2008 (Reuters; Seekingalpha).

National Real Estate Investor/Matt Valley: No Respite for Hoteliers
The epic downturn in hotel fundamentals is forecast to slow, but not before inflicting widespread pain.

CEO Lawrence Geller blog ( a bit old)

Other recent developments

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Investing

Portfolio management: lessons learned from Buffett

Reading Time: < 1 minute“Be Greedy When Others Are Fearful”: Why Buffett Didn’t Buy More at the Bottom (Yahoo Tech-ticker)

More importantly, I think controlling one’s emotion is key in this market (like yesterday and today :-(. Obviously easily said than done. Yesterday I read the WSJ top page story on people trading AIG stock, most of them lost money eventually (I believe so, at least most people gave back the gains). Trading AIG stock is an extreme example, because of its volatility in last month (August).

Other lessons from Mr. Buffett:

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