|
|
Thomas Mellon Evans
When I was reading a value investing blog, I discovered the following name that is unknown to me. Thomas Mellon Evans is best known as Tom “Net Quick” Evans because he loved to use Benjamin Graham's balance sheet analysis method, called net quick assets, which is, in the modern language, net current assets. According to the information online, he was orphaned at age of 11. Because of that, he was poor and graduated from Yale University in 1931. To keep things about him short, he started doing that method when as his friends went out in the evening enjoying themselves, he prefers to be at home, reading the companies' balance sheets in the quest of finding promising companies. I quote from babson website (first paragraph in the quote section) and times magazine (second paragraph in the quote ection) respectively:
At Gulf, he borrowed some Gulf shares at a low interest rate, and within a few years made a small return ($15,000) on his investment. His next move was to buy the defaulted bonds of the H.K. Porter Company, manufacturer of locomotives. By World War II he had become the major stockholder and was turning the business around through diversification.
With only some fatherly advice from Gulf’s Board Chairman, W. L. Mellon, Tom Evans made his way alone. For six years he saved money, like an Alger hero; and played the stockmarket, unlike an Alger hero. Thus he collected $10,000. He wanted to find and buy a family-owned business that had gone to pot. In the down-at-the-heels H. K. Porter Co., in Pittsburgh’s slummy Lawrenceville section, he found it. Once a No. 1 builder of industrial locomotives, Porter Co. was down to 40 workers.Tom Evans bought up Porter bonds at 10 to 15 cents on the dollar, reorganized the company under 77B, and became president at 28.After his act on Porter company, he went on to raid corporations in order to use his presence and shareholder voting rights, maximising the shareholders' value. In such sense of maximisation of the shareholders' value, it can be done by getting companies to participate in the value-enhancing activities. It was said that he was, probably, the first corporate raider. He was said that he had done almost everything before all the fancy names that the finance students learnt from corporate finance or financial management course such as greenmail were given by the investment bankers. He passed away in 1997.
He is probably the best role of one of four strategies of value investment style, activist investing. Beat me, when he was alive, nobody knew his name. I quote from new york times:
A private party hosted by Drexel Burnham Lambert, just emerging as the leading financier of the proliferating battles for control of America's largest corporations. Around the tables are men whose ambitions will chill the hearts of company executives, local mayors, labor leaders, and boardroom directors for years to come.
But at one table sits a man none of the celebrity-spotters recognize. He is Robert Sheldon Evans, an executive at the Crane Company, a polyglot industrial corporation whose last big headlines on Wall Street had come in the mid-seventies, when it made a bid to buy a stake in Anaconda Copper.Until today, I think his name is still unknown to many in the world. Warren E Buffett and George Soros wasn't famous at their early career. As for Buffett, he probably became famous due to his participation as a Salomon Brothers' chairman and the lawsuit of the misconduct made by Salomon Brothers. As for Soros, his name already reached everybody's name by the time the UK newspaper branded him as 'the man who broke Bank of England'. I think Thomas Evans is quite incredible person, doing all these corporate raid actions, despite of shortcomings about him.
One of Evans's curious tablemates finally asks the question others at the table are clearly pondering. Why is he here? Where does he fit into this choreography of power?
"Oh," answers the low-key man from Crane, "I'm standing in for my dad, Tom Evans."
The questioner still looks blank. Who is this Tom Evans?
A brief coolness, then: "Well, I guess you could say, he started all this." His hand swept in the room full of strivers and acquirers, raiders and would-be raiders.
Uneducated People
I bet that 99% of people in the world think that one or some of uneducated people cannot be billionaire. They are 100% wrong! Laurence Graff dropped out from school at age of 14. After that, he went on to work as cleaner. He went on to learn how to repair and solider the rings at the age of 17. He went into jewellery business. From that, he became billionaire. I happen to hear his name when I am reading some blogs about value investment. Upon seeing his name, I checked his background. I dropped my jaws after reading his background. He is impressive one. He just grab most of the available opportunities to sell his jewellery. I do agree that we need to recognise that it is the opportunity that is presented to us! Let me quote about the article regarding the opportunity from 'thisismoney' website.
In Robinson & Co department store in Singapore, which was selling his stock, came his big break: in walked the Crown Prince and Princess of Brunei. It was the beginning of a lifelong romance. The Crown Princess, now Queen, is the world's most gorgeously jewelled woman - thanks to Graff. The jewels of the 29th Sultan's three wives are flawless and the Queen, the first wife, has the very best. They have cost a fortune and made Graff supremely rich. Her patronage was the secret of his success. It opened 100 more doors for him in Asia and the Far East - this is the home of his money-making - and set him up for a lifetime.Today, he buys diamond mines aggressively so that he can find top-grade diamond and get them polished. Anyway, we should give kudos to him and his career path.
I ask Laurence for details of that moment of truth in Robinson's when the Bruneis walked in on our poor London boy. 'A lot of people say to me: 'You have good timing.' Looking back, there was more to it than that. When there's an opportunity, some people pass it by. I've been lucky enough to recognise opportunities and every day, in my business, there's an opportunity somewhere - to buy, expand, design.'
His tone darkens: 'Some people let them go by because they do not see them.' Graff staff watch out.
The Brunei opportunity must have hit Laurence Graff like a wall of money travelling at 180mph. Or perhaps it did demand recognition. The Bruneis were not yet, in those days of the unravelling British Empire, the oil-rich triumph and the playboy headlines (think Prince Jefri) they have become.
Blind People
In this topic, I encounter one personally in real action and the other in the book. As for the former case, when I was working for my friend's friend in a computer shop at Sim Lim Square, a blind man, around my age or older, came to the store with his friend, who was carrying his computer casing. This encounter was like four years ago. I discover that he lives in the same area I am currently living. This happens when I am in the bus, where he is also entering in the bus alone! It is quite amazing to figure out how to enter in the bus, especially the height between the road and the surface floor of the buss as well as the stairs. He manage to enter and sit the empty seat. Did he visualised by hearing or someone told him? I was sitting in front of him. He also know where to stop at when nobody tells him. I suspect that it is something to do with radio recorder that tells him when to alight. In any case, it is really amazing
The latter case is about blind American lady, Laura J. Sloate. About her background, she graduate from B.A. in Barnard College and M.A. from Columbia. She is Chartered Financial Analyst. According to the book I read, she was blind since the age of six. First of all, her education is in history field. She was fortunate to be hired as the junior analyst by a fund manager despite of her education. The problem that blind people face is that they cannot read anything. In the investment field, you have to read a lot of annual reports, if you are fundamental analyst, and research reports. She impressed me on her solution for this problem: she hired a secretary, whom she paid 70% of her salary. Her secretary's job is to read aloud the reports. During her early career, she had 22 stock recommendations in a row that went up. Eventually, in 1973, she couldn't find stocks that were cheap enough. Obviously, she is value investor. Because of 1973 incident, her management was unhappy because if there is no recommendation, there is no comission fee to her company. As a result of that, she decided to create a equity research boutique with her friend, Neil Wieisman in 1974. Finally, she is one of the top fund managers, who beat the market consistently. I am also impressed with her method of finding undervalued stocks. But I am quite surprised that she used Economics Value Added (EVA) method to value a stock. I suppose that she does not bother about the cons of that EVA method. For her work, she was aided by a computer who read aloud whatever the information she is looking for. The remarkable fact is that she can tell what company annual report is belong to by feeling the cover! Ok, let research more about her. Let me quote some statement about what she does from USATODAY website.
Keeping up with Wall Street's best isn't easy. Sloate is a workhorse who sleeps less than four hours a night.
Her day starts at 3:45 a.m. The minute she gets up she "flips on" the paper. Picking up the phone, she dials a number and keys in a six-digit access code. When the call connects, she gets a line-by-line account of stories published by top national newspapers. She feeds and grooms Quartz while "reading." It's common for Sloate to leave employees voice mail at 4 a.m.
Working out comes next. "It's the way I get my stress relief," she says. By 5:30 a.m. she's climbing up and down 75 flights of stairs in her Manhattan apartment building. A personal trainer arrives at 6 a.m. to spot her during her workout with weights. The fit 5-foot-6, 110-pound Sloate bench-presses 60 pounds 60 times — in three consecutive supersets. She arrives at her Park Avenue office by 8:30 a.m.
Her day extends well beyond trading hours, too. It's 6:45 on a Thursday night in early January and Sloate is still hard at work. As usual, she's doing two things at once. "I get bored fast," she says. It's not unusual for her to have two people reading newspaper and magazine articles to her simultaneously.
This night, Tracey Paleo, an actress, is reading Sloate stories from The Financial Times. At the same time, Rewey is reading her breaking news from the Internet.Looking at this quote, I think she is amazing lady. I wonder how she conduct the securities analysis course at Columbia Business School. In fact, my dream is to study MBA at Columbia Business School, taking all value-investing related and securities analysis module. You have to give your respect to her. She is too amazing.
Sloate "reads" in several ways. On weekends, she scans some 300 pages of magazine articles and other print materials into her PC, which converts it into voice. Software also lets her read Internet articles.
Then, of course, there are the real-life readers like Paleo. The pay for the aspiring actresses and university students Sloate hires to read: $8.50 to $10 an hour. Hidden away in a corner office that doubles as a makeshift library, the readers can be spotted reading books and articles out loud into tape recorders.
Managing money and analyzing stocks is the best job in the world, says Sloate, who also finds time to teach a securities analysis course at Columbia University."
Market Forces and Welfare
We have seen how Laura Sloate, Laurence Graff, Thomas Mellon Evans, and others have done without much welfare. My friend tells me welfare should be maximised in any way to assist the public as well as disabled people. My take on this is that in doing that will interfere the market forces and it will lead to unneccessary actions made by the public. Consider the unemployment insurance system in Europe and US. This system is to pay people who are unemployed. This will definately encourage them to be unemployed. In the nutshell, the higher the unemployment rate is, the lower output - products the public wants to buy- is, the lower GDP the nation will have, the more worse off the whole public (employed and unemployed) is. To be specific, it can be said that it is the part of the unemployment problem. Our common sense tell us that the removal of unemployment benefit system will dramatically encourage unemployed people to search for the job more actively. It need not to be very cruel form of action. Just that, the market force can be either very gentle, moderate, or brutal, depending on how a person interacts with another person altogether. At the same time, small or moderate amount of welfare should be needed to assist people, who have unforseen circumstances.
In my opinion, it is essence to have invisible hand in action together with moderate intervention made by authority. Adam Smith coined invisible hand, where people are being 'forced' in doing actions that maximise each other's benefits. That invisible hand is being simplified by economists into the model of perfect competition in the both aspects of partial equilibrium and general equilibrium. In addition, Keynes also believe in most of the classical economics models but he offered additional solution, where governments should intervene in the market to halt the problem becoming deeper. Because of that, Keynes concluded that in the long run, we are all dead.
Books
Title:Investment Gurus: A Road Map to Wealth from the World's Best Money Managers
Author: Peter J. Tanous
Rating:6/10
Remark:
I borrow this from library, wanting to know more about what best money managers do. The author interviewed people from academics, value investment field, and momentum investment field. Because of this book, I roughly gain some understanding about momentum investment field. That is to say that I have good idea how momentum investors analyse firms on the basis of fundamental analysis. Interestingly, I picked a new word which is sliently discussed among Wall Street: 'Black Box'. So far, I am greatly impressed by three value investors, Michael Price, Mario Gabelli, and Laura J. Sloate, Ms Sloate really amaze me the most! So far, I learn a lot how these three value investors do. That is the missing ingredient I am looking for among investment books I am reading.
Title: Value Investing Today
Author: Charles H. Brandes
Rating:6/10
Remark:
I read this book because he has met Benjamin Graham when he was broker. From there, he learnt things from Graham at that time. Eventually, he created his mutual fund firm, Brandes Investment Partners. So, I went to see what he can offer to the readers like me and the interested value investors. Surprisingly, this book combines some ideas from academic - modern portfolio theory, behaviour finance, etc - and Benjamin Graham's methods. I learnt something more about ADR -American Depositary Receipt- because Investment written by Bodie, Kane, and Macrus has written little about ADR. It is very interested how it was like in the past. At the same time, I also learn the difference between accounting standards when Brandes stresses the global investing. Overall, it is easy-to-read book.
Title: Security Analysis, 6th Edition
Author(s): Benjamin Graham and David Dodd
Rating:9/10
Remark:
This edition has better word printing quality than the 2nd edition. On top of that, the commentary written by successful value investors help us to understand each part of the security analysis. Reading the 6th edition is like re-reading 2nd edition without some chapters. In doing that, my understanding of Security Analysis gets better. So far, I am going to focus on income account analysis and balance sheet analysis on practise before I move on to fixed-income investments.
Movies and Dramas
Private Eye (Korean Movie 2009)
Synopsis:
There is a private eye, Hong Jin-ho in the Korea. Jin-ho was spending his time on hunting the adultery and missing people. Suddenly, there is a request from a medical student, Gwang-soo. Gwang-soo was asking him to investigate the murder of the son of the high-ranking official in Korea. Did Jin-ho, who never accept any missions that are dangerous take up the offer? Who is the real murder?
Rating:8/10
Remark:
The story is unique and fresh. It is so good that you are totally tempted to watch from start to end. It is like watching Korean verison of Sherlock Holmes.
Detective in 40 minutes (Korean Movie 2009)
Synopsis:
Jeong-hun was pretending to stab Tae-gyu's knife at Tae-gyu in their classroom. Somehow, a female admirer of Jeong-hun happened to be there taking the picture of this incident with her mobile phone. In few minutes later, Tae-gyu was murdered in the classroom when Jeong-hun was in the male toilet. At the crime scene, Jeong-hun, upon returning back from the toilet, was shocked to find that Tae-gyu was murdered. At the same time, Da-jeong, female classmate, was there to see shocked Jeong-hun in the classroom when she came from PE class. But Da-jeong knew that Jeong-hun was not the murderer. Both of them decide to investigate together. Who is the murderer?
Rating:6/10
Remark: It is fast paced action movie. The detective work is to be done within 40 minutes. It may be good enough for your pop corn style movie.
Mulan (China Movie 2009)
Synopsis:
The movie is clearly about Mulan's life that she is being drafted into the army to defend Wei territory. Behind this reason, Mulan wanted to take over her father, who was ill and voluntarily drafted into the army. How did Mulan live?
Rating:7/10
Remark: I am lover of Chinese military. I loved to see how Chinese soliders participate in the war. Strategies that took place in the China make me excited. Thus, the rating may be slightly biased. Aside that, you are guaranteed that this movie will make you to feel touched.
Up (Hollywood Animation 2009)
Synopsis:
Young Carl Fredricksen was fan of Charles Munts, the Adventurer. After watching the movie about that adventurer, Carl was on the way to home. He met young Ellis, who was also fan of Charles Munts. Over time, they got married and lived together until their old age. After old Ellis' death, old Carl wanted to fulfil her dream by putting their house near the fall in South America. How did he do it?
Rating:9/10
Remark: I liked this movie because I always liked family like that. It is great to see how Carl and Ellis live together till old age. I always wonder whether Warren Buffett's family was like that until his wife left in search of her new life alone and died. It is good show for people who are in middle 20s.
The Ugly Truth (Hollywood Movie 2009)
Synopsis:
Abby Richter, the producer of the news show, was embarking in the quest of searching a boyfriend that passed her checklist. However, she could not find one until she accidentally saw a tv programme that her cat press the button of the tv remote control. There is a man in that tv programme, Mike Chadway, who was demonstrating that men are not what women think. During the phone call in that tv programme, Abby was the second person questioning his credibility. There was a nice argument between them. In the next morning, he was hired in that news show which Abby was in charge of. To get the news show successful, Mike offered a challenge to her that she should take up his suggestions to hook up her dream boyfriend, who happened to move in the house that was next to her house. Does Mike's suggestions work? What is the ugly truth that stores in that movie?
Rating:8/10
Remark: It is fantastic movie. I liked how Mike and Abby interact together in that movie. Brilliant!
Inglourious.Basterds (Hollywood Movie 2009)
Synopsis:
This movie is about a story how a group of Jew-American soliders was on the task to instill fear in German Army, who had occupied France during the World War 2. On the side note, in France, Colonel Hans Landa was searching for Jews, who were living in France. Landa killed a Jew family but a female from that family managed to escape from that massacre. How will the important German figures be killed? Who get the chance to kill them?
Rating:6/10
Remark: This movie is directed by well-known film director, Quentin Tarantino. Given his reputation, you should expect bloody and gore movie. The expectation at the moment you watch this movie has not failed you. As for me, this movie is fine one but I am not really hardcore about it. Hence the rating reflects this feeling of mine.
The Accidental Husband (Hollywood Movie 2008)
Synopsis:
One day, Sofia, who was the fan of Dr. Emma Lloyd's radio show, called her, asking whether she should proceed her marriage with Patrick Sullivan. This took place when the radio went online. Because of that, Patrick overheard it from the radio he was listening. Emma somehow advise Sofia to cancel the marriage. Sofia did it. As a result, Patrick decide to get revenge on Emma. How shall he do it?
Rating:9/10
Remark: I liked this story. The love story is really unique. By the way, I couldn't recognise Uma Thurman, who was atcing as Emma until I saw her name in the ending credit. I was stunned. She has x-factor that I am attracted for that reason.
21(Hollywood Movie 2008)
Synopsis:
Benjamin Campbell, MIT student, is aiming to get the scholarship that is used to pay the school expenses to Havard Medical school. The problem to the ticket of the scholarship is that he need to present a essay that will dazzle the professor who is in charge of selecting one of all applicants. One day, he successfully solves the mathematics problem that is presented by Professor Rosa in mathematics class at MIT. It is so beautiful solution that Professor Rosa want to recruit Ben to join the team that involves card counting in the blackjack game. He eventually take the offer after a pretty lady manage to persuade him despite of his initial refusal to join. His decision to accept the offer is to use the winnings for the school expense. Will Ben able to get $300k for the Harvard Medical school expense?
Rating:7/10
Remark: I don't think this movie clearly portary the real life what MIT team do. Overall, it is ok movie. Anyone who is interested in card games should watch this.
Chaw (Korean Movie 2009)
Synopsis:
There are two cases: one about a grave being dugged and the other about a woman being murdered. The latter case suggests that it is an animal who tore the woman's body according to the expert hunter whose murdered woman is his granddaugher. The remains of the woman are badly tore. What kind of animal is it? How shall the village deal with this problem?
Rating:10/10
Remark: Wow, this is really unique movie which is totally fresh and different from watching dinosaur related movies. I need not to write this much. Just watch it and you will definitely enjoy.
Rescue (Japanese Drama 2009)
Synopsis:
A young kid, Kitajima Daichi was trapped in the area, where it was affected by the landslide. A Super Ranger, Miyazaki Shiro saved Daichi, who was passed to Miyazaki's colleague, Tokunaga Katsumi. Tokunaga and Daichi were outside the the landslide area while Miyazaki was in that area. There was second landslide. Therefore, Miyazaki was killed. In few years time, Daichi aimed to be Super Ranger. He went through the tough training. Will Daichi succeed?
Rating:7/10
Remark: There is a lot of tear-jerking scenes. It is like watching inexperience Super Ranger cadets becoming mature people. So far, it is fine drama to watch.
Whispering Corridor 5: A Blood Pledge (Korean Movie 2009)
Synopsis:
Three girls, So-Hee, Eun-young, and Yoo-jin, who studied in the same high school, were made a blood pledge. They pledged that they would commit suicide together. In the end, So-hee's best friend, Un-joo commit suicide in the end. The horror started from this point as Un-joo as a bloody ghost hunted these three girls. What was Un-joo's plan?
Rating:5/10
Remark: I used to watch Whispering Corridor from part 1 to part 4. Part 5 is the most boring and least interesting among 5 installment. I have nothing to say about it.
Gyne (Japanese Drama 2009)
Synopsis:
This drama is about doctors who are in charge of assisting females to give birth to a baby. Hiragi Nachi is trying her best to save baby's life by helping mother to have natural birth or doing operation to slice mother's stomach to get the baby out. There is an interesting case among all, where doctors including Nachi are puzzled about the infection in the patient stomach especially when the surgery operation is successful with no hitch.
Rating:8/10
Remark: Oh my god, I didn't recognise that Fujiwara Norika was acting as Hiragi Nachi. She looks different from what I last saw, probably, few years ago. It is amazing that Norika is acting so well. I predict that she will win the best actress award for this show. It teaches me that it is not easy to obtain natural birth if there are too many complications.
Code Blue Special (Japanese Drama 2009)
Synopsis:
It is a continuation of Code Blue season 1. All 6 members of Code Blue return from their suspension. They are now on the task of helping the victims of train accident. They get to learn new things such as surgery methods and directing patients to the hospital timely.
Rating:7/10
Remark: It is nice to see it again. Nothing new. I think I am getting fond of Toda Erika. Erika's acting character is something I like.
Shibatora Special (Japanese Drama 2009)
Synopsis:
Continued from Shibatora drama show, Onigami seems to have returned into the scene even though the original Onigami is still in the prison. Who is this Onigami in action? Shibatora sets out to find out with his father's diary that is about to reveal the character of that copycat Onigami.
Rating:7/10
Remark: There is a lot of emotions and excitement between Shibata and the original Onigami.
Tony Del Piero wrote and posted at at 11:21 am
