Street Capitalist: Event Driven Value Investments

Friend of the blog Miguel interviews Michael Mauboussin. Check it out if you’re interested in mental models.

Yesterday, as far as I know, Oaktree Capital decided to make all of their existing memos from Howard Marks available. Marks is a great writer and has a knack for forming clear and concise thoughts on financial markets and investing. I decided to put the memos together in one big pdf:

Oak Tree Capital: Memos from our Chairman 1990 – 2009 (PDF)
Source: Oaktree Capital

Always remember:

“An investment operation is one, which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.” – Benjamin Graham

David Einhorn is a value investor who I’ve followed for a few years now. His call on Lehman Brothers was quite prescient and he’s someone I always take time to listen to:

The Indy Star has a new article by Ted Evanoff about the merger between Steak N Shake (NYSE:SNS) and Western Sizzlin (NASDAQ:WEST):

If past takeover attempts by Steak n Shake’s new chairman and chief executive are any indication, the 75-year-old burger chain soon may be recast as a corporate raider.

Sardar Biglari, the young Texan who took control of the Indianapolis-based company last year, has quietly remade the cheeseburger purveyor into a holding company — a business whose business is owning other businesses.

It gives the 32-year-old chairman of Steak n Shake an open hand to invest what the company calls “surplus cash” in whatever strikes his interest. In the past, those interests have included failed efforts to take over the bartering exchange service ITEX Corp. and California-based Jack in the Box.

Biglari’s new plan for Steak n Shake was noted in an amendment to a loan agreement with Fifth Third Bank reported by the restaurant chain to the U.S. Securities and Exchange Commission.

Biglari himself can tap Steak n Shake for “up to $10 million of surplus cash to make investments of any lawful nature,” says the July 8 report filed with the SEC.

It’s also nice to see Kevin Byun get quoted, he’s one of the brightest fund managers that I’ve had the opportunity to meet:

Kevin Byun, managing director of Denali Investors, a New York investor that owns shares of Steak n Shake, said he expects the holding company strategy could pay off as investments begin to lift Steak n Shake’s stock value.

“I’m actually quite optimistic with the whole holding company framework,” Byun said. “He has the authority to make investments over a wide area that will be to the advantage of Steak n Shake shareholders.”

Armed and ready to raid? (IndyStar.com)

Read the full article, there are a number of different takes on the situation.

Be sure

I’m always fascinated by articles that explain how people are able to achieve odds-defying feats. Think about it, this was a commander with 200 soldiers and a few $20K missiles that managed to down $60M worth of US equipment:

November 21, 2005: The Serbian battery commander, whose missiles downed an American F-16, and, most impressively, an F-117, in 1999, has retired, as a colonel, and revealed many of the techniques he used to achieve all this. Colonel Dani Zoltan, in 1999, commanded the 3rd battery of the 250th Missile Brigade. He had search and control radars, as well as a TV tracking unit. The battery had four quad launchers for the 21 foot long, 880 pound SA-3 missiles. The SA-3 entered service in 1961 and, while it had undergone some upgrades, was considered a minor threat to NATO aircraft. Zoltan was an example of how an imaginative and energetic leader can make a big difference. While Zoltan’s peers and superiors were pretty demoralized with the electronic countermeasures NATO (especially American) aircraft used to support their bombing missions, he believed he could still turn his ancient missiles into lethal weapons. The list of measures he took, and the results he got, should be warning to any who believe that superior technology alone will provide a decisive edge in combat. People still make a big difference. In addition to shooting down two aircraft, Zoltan’s battery caused dozens of others to abort their bombing missions to escape his unexpectedly accurate missiles. This is how he did it:

Air Defense (Strategy Page)

Click the link to read the steps that Zoltan took to take on the F-17.