racemize

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:

In this case, I deliberated said I can only lose $2 from BAC. I wasn't being verbose by accident -- in other words, I'm not ignorant to the fact that WFC can drop below $30. I've been down 50% on multiple occasions -- in 2009 for example I was down 50% below my 2008 high at one point, and then again last year I was down 50% at one point off of my early 2011 peak. I'm not trying to protect against that, I'm trying to protect against an event that is specific to BAC. Yeah, so I think I've been pairing this a little differently in my head (figured this out about an hour ago). I was pairing the WFC and BAC options together and you are pairing the BAC option and BAC position together. I got stuck in that line of thinking since they were a paired trade, but I see what you mean now. For explanation, if you think of the WFC and BAC together and offsetting (e.g., if they both move in concert), then you don't have protection from BAC at 7 dollars, since the BAC option is effectively nullified by WFC option. Conversely, you could say you are protected for BAC, but you are now underwater on the WFC option. All that being said, I understand that you are protecting against a particular event, and the above is not that event.

I've only got 2+ years, so I don't think I can respond with any meaning. The current year has made my IRR for the overall about 50%, so that's totally useless...

I think of options in a more fluid sense - I see it as managing likelihoods. 1. This still leaves you with the loss on BAC original position - if you sell your underlying position at that point. Selling the puts on WFC is an attempt to avoid having your protection move up and down in concert so if they do, it is more likely to be from Mr. Market and this presents an opportunity to sell profitable put position and buy more underlying. sure, I was just trying to reconcile the statement of "you can sleep at night knowing your loss is at most 7". To confirm, that sentence is missing "as long as WFC doesn't go down the same amount" I believe? This are my original words before you edited out the important part (now in bold): Now you can go to sleep at night knowing that the worst you can lose from your BAC position is about $2 per share. Right, that's what I was referring to, though I misquoted it--it is missing the "as long as WFC doesn't go down the same amount" though? i.e., if both your WFC and BAC options move down the same amount, they offset each other, leaving you naked on your BAC position, right? Thus, you can lose more than $2 on your BAC position in that case? I just want to know what assumption there is in your statement!

I think of options in a more fluid sense - I see it as managing likelihoods. 1. This still leaves you with the loss on BAC original position - if you sell your underlying position at that point. Selling the puts on WFC is an attempt to avoid having your protection move up and down in concert so if they do, it is more likely to be from Mr. Market and this presents an opportunity to sell profitable put position and buy more underlying. sure, I was just trying to reconcile the statement of "you can sleep at night knowing your loss is at most 7". To confirm, that sentence is missing "as long as WFC doesn't go down the same amount" I believe?