racemize

well my search for "AIG warrants" didn't work--no results on either side. Way to go microsoft.

Ok, this actually made me laugh out loud (not in a derogative way): thanks txlaw!

intrinsic value or where we would buy more? I'd put intrinsic value > 1.4 and I'm happy to buy at 1.2.

Yes, I agree MrB! And the first thing I pointed out is that Mr. Watsa stated goal is to compound book value at 15% annualized, far from what he achieved in the past. I just looked it up; 1,3% difference from the last 20 years. Just trying to be critical here giofranchi, I'm a big fan of Prem Watsa and his team. ;) Sorry, I didn't quite follow, what's the 1.3% difference apply to?

I agree--I'm hoping for 10-15% growth (similar for my BRK). In the same vein, I'm not sure how easy it will be to have >15% from other securities as well, other than the current turn-arounds.

Wouldn't this same line of thinking have ruled out BRK in the 70s?

Well of course not, but I guess I don't get your point. The insurance lets them use the float, and we get that management at the cost of book, so that seems like a win to me. Re the underwriting, it is my understanding that a great deal of the >100% combined ratios have come from underwriting made prior to acquisition. I'm hoping to see those come down in the future for current operations.

I guess the distinction is, most of us are buying for the long term and not the "near term" as you indicate. Once everyone agrees it is not dead money in the "near term", what will the multiple be then? At that point, you may wish to have bought at book value when everyone didn't like it. Additionally, you get some protection if things do sour or deflation hits, or even if their value plays work out.

Why is he always with Pabrai? I hadn't heard of him until I saw him with Pabrai on the UC video.

please don't feed the trolls.

If you want to have an intelligent conversation about something, I don't think it is wise to start it out with a very condescending insult to the people you want to have the conversation with.

I personally have the same amount of BRK as FFH. I agree that, in the near term, assuming there isn't a big drop and that the deflation bets don't work out, FFH won't move much. It is my assumption that that is the reason FFH is trading near book value. However, at some point they will take off the hedges and move forward again--when everyone knows that, will it still trade at book value? Maybe not. Also, the hedges could come in handy if everything goes badly as well.

I'm still thinking about OAK. Wouldn't be terrible to have some diversity and get some exposure to high yield bonds.

Giofranchi, you are much too kind--my 60% will not be recurring! One other thing to note, I'm holding 13% BRK, 13% FFH, and 6% LUK, so we actually have a lot of overlap, and I still care about FFH!

A bit aggressive, no? I take it this is the author's commentary and not anything B2 would discuss. I agree--I'm not sure we get those book multiples given how much simpler/smaller AIG is/will be.

what's the market value of the equity positions at this point? (i.e., how much upside is the 1 billion)? Thanks for the info!

Were there any comments to note regarding his portfolio positions?

That would make sense. Here in Canada we don't have that long-term/short-term capital gain stuff, so it's not something that comes to mind easily, even though I knew it applied in the US. Thanks for reminding me of it Sullivcd. Is it just marginal rate in Canada?

correct, sorry I wasn't being specific.

Gotcha. Out of curiosity, selling because it worked, or because it didn't? Oh, it worked great. I'd had a big position (I think almost 50% at one point) in CRUS (Apple supplier). I've been selling it out as my positions turn long. Next long lots are November and December.

I'm not sure I understand what you mean here. "Big sell"? I've got a 30% position that I'll be liquidating, so if there's nowhere to put it, it'll be in cash.

100% equities. Still have decent external cash flow coming in, and I'll have a big sell towards the end of the year, so don't feel much need for cash.

Perhaps. I think Buffett's approach in terms of purchasing inevitables is that it makes it easier to be certain that you are getting a discount to intrinsic value. Buying something that looks cheap but later isn't (because the business quickly declines)... isn't value investing. This I believe is what Warren figured out a long time ago and why he went the way of inevitables or in other words businesses with very enduring characteristics. Some value investors I believe think they are estimating intrinsic value but aren't, yet they do okay anyway because they have a selling disclipline. In other words, they're out after the first large rally. So they are trading volatility but don't recognize it as such. great post. really great.

warning: that woman is ***** annoying.

Saw it on credit bubble stocks: