racemize

tax reform is his major priority by far, he doesn't want to do anything to jeopardize it by upsetting some republican congressmen. in his mind, he'd like to see FnF issues stay well in the background until tax reform gets done. conveniently his options increase on jan1 as well. I think he wants taxes done first because it increase the value of Freddie/Fannie, and therefore their warrants.

I'd add Sergio for autos. You get actual answers.

That's only true if you have great ideas to invest in. I'm stuck with the market, in effect. And the market is on a valuation that suggests prospective long run returns are poor and the downside if investors get scared is significant. The opportunity cost of cash is therefore low, and the option value is high. I will raise a little cash and let cash accumulate. I have also set targets (using CAPE) at which I will raise more cash if valuations keep rising (subject also to the valuations of the individual stocks I hold). CAPE should actually come down over the next 2y as the 2008-9 earnings come out of the denominator so these targets may well not trigger. Adding to my last post, I've tested CAPE based cash models and the returns are not good. I wouldn't recommend using that one personally.

Opportunity cost is quite high regardless. It is possible stocks make 5% for quite a few years before any big correction happens, and that is quite a lot of cost to overcome, even if you time it right. I should note that while my thesis was that you should only invest if you have good ideas, it was taken from the view of a value picker. The data actually bore out to stay invested the whole time if you couldn't pick securities. I tested lots of valuation-based models and none of them returned better than 100% invested. I even tried a few perfect hindsight models and those also underperformed. So Petec, I've changed my mind--I think I would just do the same thing I tell everyone who isn't a value investor to do in your case. Hold and dollar cost average with income. Or quit your job. ;)

I was a little confused at first, but maybe I understand. So you can no longer pick securities (I guess because of job conflict?), but you are allowed to choose sell (or not to sell) the ones you own? Sounds like a nightmare in the current environment. I would be very tempted not to sell the individuals if they are good, as it seems like you are restricted from rebuying them later. I'd probably raise cash by saving current income if I couldn't pick any current securities.

Central Texas is doing ok, but the coast is really getting it. Houston is really getting an insane amount of rain and it doesn't handle normal rain that well anyway.

I took that to mean on previous underwriting.

Looks pretty nice. I looked up MKL to play with it. If you click metrics and look at TTM, it drops a bunch of metrics. Probably not much to do about that as some metrics can't be TTM'd, but you could leave in quarterly values (e.g., BVPS). Also, tangible assets book value per share is a little confusing. I guess you mean tangible assets per share? It invokes tangible book value per share in the mind. It would be nice if TBVPS was available too. Also, can you include BVPS in the growth section along with EPS? Would be nice for several types of companies.

Anyone have tips for getting historical options data? Only need prices on a daily basis (no crazy every minute data or anything like that). Would like to get 5-10 years worth, but I'm a cheapskate.

I don't think it is clear the regulators will approve it though. They knocked out two so far.

It says EFH terminated it, so I assume they just accepted the other bid.

I just finished this book as well. I thought it was pretty good and gave a nice history of the stock market for the past century.

buybacks: Andrew Hollingworth Thank you and Good afternoon. I'm calling from London, we're shareholders of yours. I wonder if I could just ask Prem a couple of direct questions. And these sort of go back sort of six months or so to when references you made to sort of Henry Singleton and cancellations of shares and so on. Would be very interested to understand sort of what led to that sort of changes and whether that is a function of the attitude towards evaluation of the company today, whether it's a function of the scale of the underwriting facility that's now been built? And therefore it's not a sort of lasting change that we expect to have in place for many, many years and decades to come or is it more tactical to do with the sort of devaluation of the corporation you observe today? So I'd be grateful to answer that one and then I got one very small follow up. Prem Watsa Yeah, we talked about those Andrew at our annual meeting and it's a good question. Our share buybacks are basically I made the point that first we have to be financially very sound and then our focus will be on share buybacks. And so right now we've just completed Allied World, we want to make sure that the ICICI Lombard transactions, which I mentioned earlier go through. Make sure that our cash positions are through $1 billion at year end. And as the excess cash comes in and we just think our shares today not expensive and we think it's appropriate for us to buy them, buy as much as we can. And so that's how we look at it. We will never buy stock at the expense of our financial position. And it's only after our financial position is very strong that we look at buying back stock.

That's really helpful. Thanks.

Well, you are picking the absolute worse beginning point for FFH, and when it was selling for nearly 3x book. So... If they are great capital allocators wouldn't it make sense they would understand the situation and issue stock at such high valuation and create shareholder value this way ? Using your stock as currency is a major strength that a smart management team should know how to do. It seems clear you want to view this stock with a very particular rear-view mirror. I'm not sure why you are picking that date, and it is the one that will make them look the worst. You could, for example, try their inception date. Or you could look at BVPS growth rather than stock price growth (though I don't think that would make them outperform BRK at that date). In any event, they did issue stock and made the worst acquisition in their history. They then barely survived the resulting turmoil and tough insurance environment. Then they made an insane amount of money during the GFC. Then they bet the wrong way for too long. So, sure, they did a really really shitty job at that moment. Then they did amazing. Then they did shitty. The longs in this thread are indicating that it looks like prospective returns look good. You don't have to believe them/us, but pointing at 1999 returns as if the people talking don't know about it doesn't make that much sense, given this board's history/focus.

Well, you are picking the absolute worse beginning point for FFH, and when it was selling for nearly 3x book. So...

I was definitely listening, although I found it pretty confusing. Singleton was only able to do that because of the huge discount the market applied to his business. Without the discount, he couldn't have pulled it off, so it seems a little weird to predict that you can do the same thing that he did without knowing the future?

You cut me real deep just now txlaw. Real deep.

Thanks guys. Nothing like all your friends stroking your ego...

Got you covered. I'll PM.

That will remain nameless. http://bit.ly/2u7UoH9

I came to post that as well. No way 1.2 is 50 cents. Probably 70.

No, that was my fault, I didn't think through the theoretical book of your thought experiment carefully enough.

Nobody buys just float. When an insurance company buys float they also get a whole bunch of assets along with it. Think of the Lloyds deal as a good example. Not even an insane person would pay to take over a in insurance company's liabilities. I'm not saying they do, I'm extending vinod's thought experiment where he said he would pay for the float.

I think where I'm not following is that you are willing to pay for the float. If Berkshire has it and you would buy the float for face value, then not only is the float not a liability for Berkshire, it is an asset (since they can sell it). Thus, the logic seems to me to tilt to more than calling the float zero liability.