Meeting # 32

The meeting was to present our valuations of JB HI-FI. 
We also had some good general conversations about JBHIFI as well. I thought it was a very effective meeting and feel we made some good progress.

Attendees  

• Roy 
• Olzhas
• Paul
• Jeffery had also kindly send us some documents that I brought along with some valuations he had got from a variety of sources.

I presented my workings to Roy and Olzhaz and they gave me feedback. My workings got so far as calculating a minimum share price and the earnings per share growth rate. The next step is to use these workings and apply the future predicted share price with a return of 10% per year to back calculate a maximum price which takes into account.


Key Learnings from the meeting

• For the value calculations generally you are better off using EBIT (as it is closer to the actual earning engine of the business - like the free cash flow figure)
• The calculations seemed fairly close to what we should be doing. 

The calculations can be found on this spreadsheet valuation spreadsheet if you are on the mailing list you should have write access to it. This will be the place for all our calculations  we produce about JBHIFI. 

Next Steps

We plan to continue to deep dive into JBHIFI 

• Roy will attempt to finish my calculations
• Olzhas will add some of his own valuation calculations to compare methods
• Paul will put together a financial definition cheat sheet so we can quickly check financial terms etc
• Anyone else Please read the spreadsheet and add anything you want in the blank spreadsheets. And have a go at valuing or adding to the analysis on JBHIFI

Meeting #31

At the meeting today where Jeffery , Roy, Justin and I. Justin had been very busy and had some good tips for us to look into at a later date the companies were
[placeholder]

We all went through the numbers on JB and have decided that our task for the next meeting is to come up with a dollar value for the shares in the company. We will then present this and work through our numbers to the group.

JBHIF 10 year numbers can be found here [when I upload them - next week]

Interest Rates

I spoke to my bank today to find that the interest rates were going up again to 7.5%. This is a big difference to 0.5% in the UK and 0.25% in the US.

Below is a chart of historical interest rates in the UK (In the last 20 years interest rates have been around 6%). You can see that 0.05% is a 20 year Low for the UK and nowhere near the mean value of about 6%. This low rates in the UK and US are just another indicator that both economies are in really bad shape and trying increasingly desperate measures to get the economies moving. I hope not too many people in the UK have bought recently thinking that a 1% mortgage is "normal".

One of the things I hear a lot is "If we get huge inflation then I'll pay off my house in double quick time" well maybe not. Countries can use inflation to pay off the national debt but for the like of you and me we cannot use inflation to easily pay off our house. The reason for this is that what often happens is interest rates can go up to match inflation. There are a few examples on Wikipedia along with more data on interest rates.

Investing in Lithium

This is a bit off topic but I am interested in having some exposure to the likely commodities boom that I see on the horizon. The most interesting for me are phosphorous and lithium. A Chilean company SQM, listed in Santiago and in New York ADRD is a company with huge reserves of both - I would like to keep this as placeholder for further analysis. The price has recently shot up. Maybe its too expensive now. In 2010 an ETF was launch for lithium (I'm not really sure how this works though) - Paul

I found another interesting site on lithium investing here

Cash Reserves of Banks

I went to my bank to get some money the other day. I needed $4000. They told me that officially I needed to give 24 hours notice for cash withdrawl over $2,000 however they had enough today so they could give me my $4000. Now my bank is probably a bit smaller than a big bank like ANZ but I found this quite startling. It got me wondering about how much money banks have in reserve.

A note about Reserve banking . Banks don't need $100 dollars to lend you $100. The US has a requirement that the banks have at least own equity worth 10% of the total loans outstanding. So if Citibank only actually owned $10 then the sum of all the loans they could make could not exceed $100.

So I did a little investigation and what I found (with a quick look on wikipedia) startled me somewhat. I knew that the US had a 10% requirement. I didn't know though that the UK and Australia does not require any reserve whatsoever. So they can make money loaning money they don't have. I wish I could do that! Below is taken from wikipedia

Country	Required reserve (in %)	Note
Australia	None	Statutory Reserve Deposits abolished in 1988, replaced with 1% Non-callable Deposits[5]
Canada	None
Mexico	None
New Zealand	None	1999 [2]
Sweden	None
United Kingdom	None
Czech Republic	2.00	Since 7 October 2009
Eurozone	2.00	Since 1999[6]
South Africa	2.50
Switzerland	2.50
Poland	3.00
Chile	4.50
India	6.00	as per RBI.
Bangladesh	5.50	Raised from 5.00. Effective from 15 May 2010
Lithuania	6.00
Pakistan	5.00	Since 1 November 2008
Taiwan	7.00	[7]
Latvia	8.00
Jordan	8.00
Malawi	15.00
Zambia	8.00
Burundi	8.50
Hungary	2.0
Ghana	9.00
United States	10.00 If anyone believes there is something incorrect or misleading with this article then please add to the comments below or send me an email

Meeting #30

Attendees
Olzhas
Paul
Justin
Roy (briefly by phone)

Short and sweet meeting. At the meeting Justin presented his work on Infomeadia.

Revenue was erratic and dividend behavior seemed out of line with profit. Roy also provided a little insight but we concluded that there financials were to erratic to make continuing evaluation worthwhile.

It was also great to see a new face ,Olzhas, who had some good input on Infomeadia as well as some good discussion about things warren buffet and more general economics.

Next Meeting
Paul Ayling, Roy, Justin , Mandy & Giselle to evaluate JBHIFI. Olzhas to present some analysis on a separate company and also provide a buffetolgy checklist and some information from morningstar. Because Christmas is coming up we made the decision to have another meeting next week to keep momentum.(see calendar)

Meeting #29 Go through The financial Review

Another successful meeting in the Westin Hotel. Thanks to Roy and Justin for their hard work in between sips of beer. Condolences to Giselle who was unfortunately not well and could not attend. Regards to Mandy who hopefully is getting creative on holiday somewhere and could not attend.

We went through the financial Review and noted down any companies we recognized from all the companies in the ASX omitting any sector that were too hard. We hope by doing this we can work on the lowest hanging fruit first (easiest to understand).We each have 2 hours of homework to do before our next meetup.




Actions
So we have 3 weeks until the next meeting and we all have 2 hours of homework to do in 4 weeks. Thats 45 mins a week.


Paul

• Complete - write up our selections amend to a spreadsheet and add market capitalization. See this link for the spreadsheet
• Complete - Set calendar and document on this blog

Roy to Review Infomedia

• Get 10 years worth of financial info
• Read 1 Annual report
• Compile a list of the key soft attribute about the company - consumer monopoly etc
• Evaluate the overall performance of the company
• Evaluate the Overall performance of the managers
• Watch the crash course

Justin to Review Infomedia

• Get 10 years worth of financial info
• Read 1 Annual report
• Compile a list of the key soft attribute about the company - consumer monopoly etc
• Evaluate the overall performance of the company
• Evaluate the Overall performance of the managers
• Put the Documents on Definitions onto google documents

Giselle

• Complete reading from last time
• Watch the crash course

Mandy - Optional

• Read "The warren buffet way or buffetology"

Economic Fundamentals - The Crash Course

I was listening to an interview with Chris Martinson on the survival podcast.

Chris Materson is a really interesting, intelligent guy with scientific training and a thirst for numbers more details can be found about him here.

He has a free video course that you can watch on youtube (click on the image above to view it). It is very logical and well cited. I would recommend anyone who is investing at present to spend some time watching this so they can understand the major financial issues that will shape the economy in the future.

Meeting #28 - 9th September 2010

We just had our meeting Justin had made good progress on Buffetology. Giselle still has quite a bit of reading to do.

Actions

All

• All buy a financial review and bring along with highlighter
• Select one company we think is of good quality according to Warrens criteria

Giselle

• Read the parts of Buffetology related to selection of high quality companies

Next Agenda

• Each of us Present why we selected the company we selected
• Agree on three companies in the same market sector to analyse
• Allocate a company each to then analyse to calculate a value range for the shares

Meeting #27

Me to find a suitable stock to find for us to value - Straights Resources and to schedule

J&G To listen to the investor questions podcast and start analysis on the company
J to get his extra data on the company
Me to publish spreadsheet on the company to be the basis for calcs

Hyper Inflation - Again and hedging strategies

It's a bit depressing but more people are now talking about the US and it's likelihood for having huge inflation. 

Ron Paul (video above) is my favourite US politician (I only really like him and Ralph Nader). He serves on the House Financial Services Committee, the International Relations committee, and the Joint Economic Committee and on the Financial Services Committee, Rep. Paul serves as the vice-chairman of the Oversight and Investigations subcommittee.


There is another interesting article about the fed here all in all the more I understand about the subject the bleaker it looks. 

As part of my investment strategy and as a hedge against hyperinflation I am looking into how I buy land with some of my superannuation. I will let you know how I get on

Tasks

Ahh 2010 and we have all been on holiday! I think we all forgot what we were supposed to be working on so I thought to make things easier I'd add a sheet here so we can see what we commited to last time. At any time click "Current Tasks Assigned" toward the top of the screen.