Masterofnone

I lurked and lurked on this board but sat on my hands for a long time. First purchased in March of 2021 and built up the majority of my position before the tender offer. Then after the tender, astonishingly, Mr. Market didn't believe that the $500/share offer was an actual bullhorn in the streets announcing that Fairfax was cheap, He kept selling me shares at or below the tender price. No additional adds until the Muddy Waters favor. So perhaps the best actual execution of any investment in my 25+ years in the market.

BC

True dat. Hard to get any attention announcing that the sky is not falling. And hard to see the big picture that good companies do well regardless over the long run. If you own Berkshire, you should hope that occasionally the sky does fall.

Problem is that even with the restricted parameters, many people mess up by "changing options" at the worst time. Being greedy while others are fearful takes knowledge and guts. So many folks bailed at just the wrong time in 2008-2009.

The catch is that the way to take advantage of them is to have some unaffected liquid assets or use debt. Using debt can be tricky if assets continue to go down further. Raising cash is "timing the market" and being wrong reduces returns. Getting 4.6% for holding cash or equivalents makes this a bit less problematic. But as you stated, you have a good chance of being wrong. That said, I have gone to about 15% cash for the first time in my investment career. I'm in my 7th decade now and potentially reduced returns doesn't seem all that bad. And on the other side is my experience in early 2009 when I had to turn over every rock to find a way to invest. Berkshire traded at 2x book in 2007 and in obvious hindsight raising a bit of cash then would have been pretty damn smart. There are objectively high valuations currently and for those of us with shorter horizons, it doesn't seem all that dumb to protect a bit on the downside and to also have some powder if prices become objectively stupid on the low end.

T-bills. No ideas. Ask me in April.

I think LEA fits the bill.

Though it is simpler to see the world in back and white, it is very seldom the case. An example: MSF (DwB) set up a maternity ward in the Hazara neighborhood of Kabul. Under the Taliban, the Hazara community in Afghanistan is subjected to violence and dehumanization. This ward saved mothers and their children from sickness and death. In May of 2020 two gunmen entered the ward and shot and killed 24 women, children and babies. Were these gunmen our friends???

+1 They are lean and efficient and treat where there is need. A good friend volunteers six months of her life every year (a true saint) and her accounts would make anyone weep. They do so much with the bare minimum- every aspect of the organization is efficient.

In December of 2007 Berkshire was trading at 2 times book. I didn't sell any shares. Had I done so with conviction, I would be considerably richer today. (As it was, when prices got halved, I turned over every rock for capital to buy more.) From that 2007 peak, shares have gained about 400%, (CAGR a bit under 10%), while the shares I bought November 2008 have gained 720%. It works out fine to fall in love with a wonderful business and never sell but it might not optimize returns. It certainly is less work, and if it is a truly great company, less actual risk to simply hold, regardless of valuation. You might not be correct determining fair value. I'm now retired and this again changes the calculus for me. I'm more interested in retaining what I have. Berkshire is as close to fairly valued at the moment as it has been since 2007 and I've sold some in retirement accounts. At some time, Fairfax will likely become fully or even over valued. I'll sell when I think so- it has been a hell of a run. If it keeps being run as it is today, never selling a share should also work out fine. It is tricky to maximize returns- things can become dear and stay dear for a long time. You have to be right in your assessment that you will be able to re-enter at a lower level, and that's beyond a lot of peoples pay grade.

The most important aspect of nanocap investing is whether ownership/management gives a hoot about you as a stakeholder. Some, such as Tim Eriksen succeed because they are willing to take activist roles- even end up running the business. There are many pratfalls. Good companies with large insider ownership go private or do reverse stock splits to squeeze out small owners. It is hard to accumulate a meaningful position and sometimes even harder to exit. But there can be major misprising during stressful events for the same reason. Look at Eriksen capital management and Alluvial capital. It will give you a feel for the how and what in this space. It will take a ton of your time. It is way easier to find a few exceptional companies and sit on your hands.

On 11/19 FFH.TO closed at ~$1923. Since then, it has gained 6.7% in a little over two weeks. I would think that much or all of this rise was due to Index addition speculation. Hopefully it will overshoot with selling/shorting over the next week and present another modest buying/buyback opportunity. Same company today and Monday.

Smaller company and smaller index.

Or perhaps the best way to frame things would be how to best spend your time to lead the best life. Being your own boss allows for this.

It is logical that traders might buy looking to sell into demand should there be an add. I would guess that much of the volume for the past several weeks involves jockeying around the calculated odds long and short. I would expect this happens any time indices are scheduled to add or remove components. When Berkshire, with its low trading float got added to the S&P there was speculation and calculation that there would be a significant price jump. The actual rise was a few percent, tempered by these sort of arbitrage trades. The actual required fulfillment of demand of indexers has been taking place by proxy, resulting in the rise in price over the past weeks.