benhacker

Website is down for me both yesterday and today. I can't attend, but in the future I'd like to be able to, perhaps when I have only one job! Ben

Interesting discussion. For reference, I don't see it stated so I'll do it: 1) FFH unhedged fully in Nov '08. 2) FFH hedged up to 25-30% of equities from 2H '09 to end of Q1 '10. 3) FFH hedge up to 92% (call it 100%) by end of Q2 '10. During Q2 '10, the S&P reached above 1200 (not sure where the 1060 number came in, but maybe I missed something) -- I think Eric's points lead us back to an argument that these hedges, are indeed "hedges". FFH was adding to their shorts in the mid of '08, but a few things changed between then and Nov '08. Namely, their CDS windfall grew by >$1B which likely changed their desire / need for "hedges". Yes, equities were cheaper and I'm sure that is part of why the hedge was removed, but they were on much more sound financial footing, were in the process of buying billions of BHAC muni bonds, and likely felt that the hedge while becoming less effective was also not quite as necessary. Now the resumption of the hedge does seem early (to me), but I think a market neutral strategy (short the US) with a lot of international, convertible, and other special situation / private placement stuff is a good long term direction; with the US markets at >20x GAAP EPS, seems logical. But I agree that the ~1200 or so level was probably only marginally overvalued at the time. Seems like there could have been better hedges (I guess they were also short a lot of global miner and commodity names around this time as well so perhaps it was just a size issue.... shorting $6B worth of individual names is a challenge.) FFH's hedging does look off in hindsight, but honestly, if you would have asked me in 2010 if by 2013 the market would be trading for 20x+ GAAP earnings on a 10% profit margin, a Shiller PE of 24, and 2.3x book value with a sub 2% yield I probably would have laughed at you. If you would have told me that the valuation of EAFE stocks was going to be 30-40% lower I also wouldn't have believed it. Yet with anemic revenue growth, and limited net buyback of shares, the S&P / Wilshire trade up to fairly elevated levels while other countries shares (at least in many situations) trade much cheaper. Whether or not FFH has made all the right or wrong moves, the magnitude of how bad they "look" and how many folks on this board are questioning them is probably more important than the FFH specific discussion. The US markets are priced right now as if low rates are here to stay "forever" *and* that those same low rates of capital won't lead to companies lowering their required rates of returns when competing and thus driving margins down dramatically for everyone. To me, this is strange. Or maybe investors are now truly willing to accept much lower returns on equities going forward and are ok with that. We'll see. Ben

Always be cautious of whether you are counting votes only from those who are raising their hands. On message boards, those of us who have nothing new to add tend to be silent. We don't stand up and say "Long time Fairfax holder, fine with the current strategy. Just for the record." Ben (Long time Fairfax shareholder. I manage money for others. Fairfax is my #1 position. I'm not disappointed or concerned about their hedging strategy.)

Looks like the 18m shares were directly from Jazz purchases which they did over a few years if I recall... looks like (from historical quotes) they were buying I think around $3.00 to a little over $4 maybe. Dividend was 0.05 / month roughly. Probably a decent but not stellar return given this was a purchase made when some things were really cheap. Ben

Thanks for sharing cubsfan!

Some historical color as well as how you can tease some of these complex ownership items out (from our old friend Bsilly): http://boards.fool.com/billtidd-if-youre-really-interested-i-can-22123879.aspx Cheers, Ben

As was said earlier, SEDI.ca is where you go to find this information. Their site sucks, but poking around you can find what you are looking for. Find "issuer reports" and then search for FFH. You can also find what holding companies Prem owns his FFH through and what % of said holding companies he owns. ----- Below is the full report for Fairfax of Insider owners from SEDI, sorry for formatting ---- Legend: Insider's Relationship to Issuer: 1 - Issuer, 2 - Subsidiary of Issuer, 3 - 10% Security Holder of Issuer, 4 - Director of Issuer, 5 - Senior Officer of Issuer, 6 - Director or Senior Officer of 10% Security Holder, 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6), 8 - Deemed Insider - 6 Months before becoming Insider. Issuer Name: Fairfax Financial Holdings Limited Date of Last Reported Transaction(YYYY-MM-DD) Security Designation Registered Holder Closing Balance Insider's calculated balance Closing balance of equivalent number or value of underlying securities Insider Name: Ambridge, Trevor Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2006-12-31 Subordinate Voting Shares 14,177 2006-12-31 Subordinate Voting Shares Faith Ambridge 266 2003-03-10 Subordinate Voting Shares The Cymru Trust 80 Insider Name: Barnard, Andrew Insider Relationship: 2 - Subsidiary of Issuer Ceased to be Insider: Not Applicable 2012-12-31 Subordinate Voting Shares 36,715 Insider Name: Bennett, Peter Malcolm Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2006-09-26 Subordinate Voting Shares 300 2006-09-26 Subordinate Voting Shares Elizabeth Bennett 400 Insider Name: Bennett, Robert Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2012-03-09 Subordinate Voting Shares 2,161 Insider Name: Bonham, David Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 $75,000 2012-08-07 Options (Subordinate Voting Shares) 3,750 3,750 2012-03-30 Subordinate Voting Shares 542 Insider Name: Boyle, Lawrence J. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-10-28 Subordinate Voting Shares 0 Insider Name: Bradstreet, F. Brian Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 The Bradstreet Family Foundation $175,000 2009-03-31 Options (Subordinate Voting Shares) 1,603 1,603 2012-03-30 Subordinate Voting Shares 51,130 2012-02-28 Subordinate Voting Shares 1004741 Ont. Ltd. 0 2004-12-22 Subordinate Voting Shares 1352871 Ontario Ltd. 0 2012-11-15 Subordinate Voting Shares RRSP 8,360 2003-06-05 Subordinate Voting Shares RRSP of Spouse, Maria E. Bradstreet 2,185 2012-11-15 Subordinate Voting Shares The Bradstreet Family Foundation 2,200 Insider Name: Burke, Frances Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 RSP $65,000 2012-03-30 Subordinate Voting Shares 14,048 2003-03-10 Subordinate Voting Shares 1002743 Ontario Ltd. 11,249 2003-03-10 Subordinate Voting Shares Danny Burke - RPS 550 2010-12-31 Subordinate Voting Shares RSP 1,541 Insider Name: Cassil, John Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2005-03-30 Options (Subordinate Voting Shares) 600 600 2005-02-11 Subordinate Voting Shares 29 Insider Name: Chan, Sammy Y. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2004-12-31 Subordinate Voting Shares 24,548 Insider Name: Chou, Francis Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2003-12-31 Subordinate Voting Shares 61,450 2003-03-10 Subordinate Voting Shares Chou Associates Management 500 Insider Name: Christiansen, Jan Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2012-03-09 Subordinate Voting Shares 2,968 Insider Name: Clarke, Peter Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2010-05-10 Options (Subordinate Voting Shares) 5,025 5,025 2012-03-30 Subordinate Voting Shares 1,100 2010-12-31 Subordinate Voting Shares RRSP 11 Insider Name: Cloutier, Jean Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2006-11-23 Options (Subordinate Voting Shares) 8,070 8,070 2009-10-05 Preferred Shares Series C 1,000 2012-03-30 Subordinate Voting Shares 3,899 Insider Name: Coerver, Richard F. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2005-08-04 Subordinate Voting Shares 312 Insider Name: Dey, Innes Fraser Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable Insider Name: Dowd, James F. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable Insider Name: Esposito, Nicholas P. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-10-28 Subordinate Voting Shares 0 Insider Name: Evensen, Philip Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2003-08-11 Options (Subordinate Voting Shares) 0 0 2003-12-10 Subordinate Voting Shares 100 Insider Name: Gallagher, Christopher L. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2010-03-05 Subordinate Voting Shares 278 Insider Name: Gibbs, Dennis Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2005-11-02 Subordinate Voting Shares 47,430 Insider Name: Griffiths, Anthony Frear Insider Relationship: 4 - Director of Issuer, 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2004-02-09 Options (Subordinate Voting Shares) 2,750 2,750 2002-12-30 Subordinate Voting Shares 1,690 2002-12-30 Subordinate Voting Shares 3102726 Canada Inc. 1,000 2002-12-30 Subordinate Voting Shares Fourfourtwo Investments Limited 4,010 2002-12-30 Subordinate Voting Shares RBC Dominion Securities RRIF 6,300 Insider Name: Gunn, Robert John Insider Relationship: 4 - Director of Issuer Ceased to be Insider: Not Applicable 2007-05-07 Options (Subordinate Voting Shares) 2,000 2,000 2010-12-08 Subordinate Voting Shares 750 2010-12-09 Subordinate Voting Shares RSP TD Waterhouse - Bob Gunn 250 Insider Name: Horn, Alan Douglas Insider Relationship: 4 - Director of Issuer Ceased to be Insider: Not Applicable 2008-05-05 Options (Subordinate Voting Shares) 1,754 1,754 Insider Name: Hurlin, Garrick James Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable Insider Name: La Selva, Vincenza Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-08-27 Bonds 7.5% Senior Notes maturing August 19, 2019 $75,000 2009-08-27 Bonds 7.5% Senior Notes maturing August 19, 2019 RSP $50,000 2006-12-12 Options (Subordinate Voting Shares) 1,500 1,500 2011-06-23 Preferred Shares Series C 0 2012-03-21 Subordinate Voting Shares 432 2012-03-30 Subordinate Voting Shares RSP 1,638 Insider Name: Lace, Roger Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2002-10-03 Subordinate Voting Shares 4,373 2002-10-03 Subordinate Voting Shares Draxson Holdings Ltd. 53,550 2005-04-22 Subordinate Voting Shares Francis D. Lace 8,000 2012-03-30 Subordinate Voting Shares Patricia, Joseph & William Lace 2,577 Insider Name: Lovell, Peter H. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2012-03-09 Subordinate Voting Shares 1,344 Insider Name: Mallier, Philippe E. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-10-28 Subordinate Voting Shares 0 Insider Name: Martin, Bradley Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2006-11-23 Options (Subordinate Voting Shares) 14,500 14,500 2012-03-30 Subordinate Voting Shares 4,114 Insider Name: Morvan, Lambert Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2007-02-22 Subordinate Voting Shares 69 Insider Name: Murray, Paul L. Insider Relationship: 4 - Director of Issuer Ceased to be Insider: Not Applicable 2005-04-12 Options (Subordinate Voting Shares) 2,840 2,840 2005-04-12 Subordinate Voting Shares Pinesmoke Investments 80,000 Insider Name: Overy, Carl A. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2010-03-05 Options (Subordinate Voting Shares) 278 278 Insider Name: Palmer, John Ralph Vernon Insider Relationship: 4 - Director of Issuer Ceased to be Insider: Not Applicable 2012-05-03 Options (Subordinate Voting Shares) 1,244 1,244 Insider Name: Pietropoli, Lucien Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2010-03-05 Options (Subordinate Voting Shares) 278 278 2009-10-28 Subordinate Voting Shares 122 Insider Name: Price, Timothy Robert Insider Relationship: 4 - Director of Issuer Ceased to be Insider: Not Applicable 2010-05-03 Options (Subordinate Voting Shares) 1,300 1,300 2010-04-22 Subordinate Voting Shares 1,000 2010-04-22 Subordinate Voting Shares Roppongi Investments Ltd. 700 Insider Name: Quinn, Brian D. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2010-03-05 Subordinate Voting Shares 278 Insider Name: Quon, Gary Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2006-07-01 Options (Subordinate Voting Shares) 600 600 2006-07-01 Subordinate Voting Shares 541 Insider Name: Ratnaswami, Chandran Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2008-09-24 Bonds 7.375% maturing April 04, 2018 BMO Nesbitt Burns $400,000 2008-09-24 Bonds 7.375% maturing April 04, 2018 RRSP - Chandran R at ScotiaMcLeod $500,000 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 BMO Nesbitt Burns $300,000 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 RRSP - Chandran R at ScotiaMcLeod $250,000 2006-12-21 Options (Subordinate Voting Shares) 4,312 4,312 2012-03-30 Subordinate Voting Shares 9,417 2012-03-30 Subordinate Voting Shares Anita, Mahima & Viren Ratnaswami 1,548 2003-05-21 Subordinate Voting Shares Chan Vima Limited 500 Insider Name: Rivett, Paul Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2004-04-15 Bonds 7.5% Senior Notes maturing August 19, 2019 0 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 Janis Wolfe RRSP $5,000 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 Janis Wolfe TFSA $5,000 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 Paul Rivett RRSP $35,000 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 Paul Rivett TFSA $5,000 2012-05-07 Options (Subordinate Voting Shares) 16,415 16,415 2012-03-30 Subordinate Voting Shares 804 Insider Name: Rubin, Jeffrey M. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-10-28 Subordinate Voting Shares 0 Insider Name: Salsberg, Eric Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2009-05-04 Bonds 7.75% due July 15, 2037 $250,000 2008-12-31 Bonds 8.30% maturing April 15, 2026 $250,000 2008-12-31 Bonds 8.30% maturing April 15, 2026 Lynne Salsberg $75,000 2012-03-30 Subordinate Voting Shares 86,258 2009-12-29 Subordinate Voting Shares Lynne Salsberg 0 Insider Name: Salsberg, Eric P. Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable Insider Name: Salvesen, James B. Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2012-03-09 Subordinate Voting Shares 572 Insider Name: Schokking, Ronald Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2009-08-18 Bonds 7.5% Senior Notes maturing August 19, 2019 $100,000 2012-03-30 Subordinate Voting Shares 29,997 Insider Name: Smith, Bryan Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2004-04-16 Subordinate Voting Shares 15,785 Insider Name: Sweitzer, Brandon Insider Relationship: 4 - Director of Issuer Ceased to be Insider: Not Applicable 2004-04-14 Options (Subordinate Voting Shares) 0 0 2012-11-16 Subordinate Voting Shares 2,197 Insider Name: Varnell, John Charles Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2010-06-07 Subordinate Voting Shares 2,929 Insider Name: Wacek, Michael Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2012-03-09 Subordinate Voting Shares 5,161 Insider Name: Watsa, V. Prem Insider Relationship: 3 - 10% Security Holder of Issuer, 4 - Director of Issuer, 6 - Director or Senior Officer of 10% Security Holder, 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2002-10-03 Multiple Voting Shares The Sixty Two Investment Company 1,548,000 2012-03-30 Subordinate Voting Shares 127,973 2002-10-03 Subordinate Voting Shares 810679 Ontario Ltd. 129,735 2002-10-03 Subordinate Voting Shares Nalini, Ben, Christine & Stephanie Watsa 2,100 2002-10-03 Subordinate Voting Shares The Sixty Two Investment Company 50,620 Insider Name: Weiss, Robert Samson Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2006-04-10 Subordinate Voting Shares 800 2006-04-10 Subordinate Voting Shares Robert S. Weiss RESP 10 Insider Name: Williamson, Marilyn Jane Insider Relationship: 5 - Senior Officer of Issuer Ceased to be Insider: Not Applicable 2005-03-30 Options (Subordinate Voting Shares) 2,850 2,850 2009-11-13 Preferred Shares Series C 2,100 2010-02-23 Preferred Shares Series E 200 2002-10-03 Subordinate Voting Shares 1,850 Insider Name: Young, Brian David Insider Relationship: 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6) Ceased to be Insider: Not Applicable 2012-03-09 Subordinate Voting Shares 5,941

My spreadsheet shows the FFH equity portfolio (not complete capture of most of the US / Canadian stuff and IRE) is up ~20% in the 4th quarter. Mostly driven by BRK.to, IRE, RIMM, and OSTK. Merry Christmas. :) Ben

Far from me to defend Paulson, but some of the comparisons of performance on this thread are not fair. Let's ignore the "short" homerun, and I think there is general agreement that the huge inflow of funds sunk him after that bet... so let's stay focused on his track record prior. -- He did ~11% (according to Stanley P) for ~15 years vs. ~9% for the S&P. Ok, good, but not "great". .... but his 11% was in a market neutral merger arb fund (only one down year I believe from memory, and it was like -2%) not in a typical market risk investment. So lower risk of downside. Oh yeah, and he was charging either 1.5 / 20% or 2 / 20% which is netted against that 11% number. So the guy protected the downside much better than the general stock market, and achieved higher returns by a substantial margin (I believe his 11% post fee corresponds to 14-15% pre-fee or so). 15% with low vol for 15 years? Seems crazy to use anything less than "good" for what he accomplished. I think when he swung for the big leagues, a lot of stuff changed. I think there are a lot of lessons, but calling someone middling or mediocre who did what Paulson Advantage did is really harsh I think. Ben

Do you think that his original cost factored into his decision to sell? Should it (other than for tax reasons)? Why? I ask only because the valuation (and thus forward returns) of a business are totally irrelevant to the price you paid. Thinking about your cost on an investment leads to almost completely bad things in my experience. Taxes need to be considered, but only taxes. Expressing yield on cost is a nice way to feel good about a successful investment, but it's irrelevant. Ben

My feelings are similar to SJ. If I was being offered 116 to leave the bonds, I would do so. Ben

The only retail broker that will consistently provide at least partial interest payment for lent shares in all cases is IBKR. You can see how they structure the service on their website. I have not used this with them, but they are the only one to offer it in my experience. Other brokers will occasionally make offers for specific securities to some of their customers, but it's more of a one off thing.

Value101, I think the problem with this is that it isn't logical. The bankruptcy code is created by a government. What equivalent code is there for a sovereign entity? Company's (specifically their boards) have specific rules of which stakeholders they are required to look out for. Countries must look out for their people/citizens correct?... their creditors are only relevant in that having good relations with creditors helps the people. So I'm not sure "logic" doesn't dictate some other path here for Greece; at a minimum, I'm certain that logic doesn't mean that all countries should pay off their debt regardless of costs. It's an issue that is very situations specific. If Greece feels they will be worse off as a country after default, then maybe selling islands is good. If Greece feels that there will be an invasion or other act that directly challenges their national freedom or forcibly takes their assets, then maybe selling islands is good. But in absence of that, maybe the best choice for their stakeholders was (and still is) default. I'm not expert, but to me, buy country/sovereign debt is more about willingness to pay, than ability to pay for the above reasons. Ben

IBKR has paid a special in the past, there have been rumors of paying one again this year and the MM division is overcapitalized and generating low ROE so it may make sense in the short term. Ben (long)

For any other young bucks out there trying to make a name for themselves (I'm not too old myself...), I'd encourage you to remember that nothing goes away on the Internet... when you say some really dumb shit, it's out there forever (I know, I've said some not-so-smart stuff...). When you associate with frauds fakes and liars, it's forever burned into your online resume. In one article Jacob most likely lost (permanently) the respect of the exact audience that he was seeking to impress (at least on my reading of his prior notes about Klarman, etc). I don't know him, but reading that fluffy POS article on an obvious scam is enough for me to remember his name in a negative light for a long time. The world is too small to do stuff like this for a few bucks. It's too small to do this for a lot more than a few. Ben

Eric, and there is a service that does this regulatory arbitrage for you (forget the name)... it's run by ex-Fed guys. But it does cost money (% of AUM fee). Certainly you can do it yourself, but quite the paperwork hassle. Ben

Biaggio, Imagine you have $100m that you want to save. What are your alternatives? You don't have FDIC protection (and there is no reasons why bank accounts can't have negative rates), and you can't put that in a safe under your bed. Sure, regular Joe's with $5,000 don't have to accept negative rates, but they aren't the majority of deposits. Not arguing that we will see those rates, but I'm just saying that there is some reason for why T-Bill yields sometimes go negative. It could happen for longer dated issues too. Ben

What Writser said. Most of the issues with HFT could be solves by some simple sounding (might be hard to impliment) rules. 1) Ensure quotes have to put in place for a minimum period of time (say 1 second) 2) Ensure HFT have to register as market makers and can't exploit rules that disadvantage registered market makers (For good reason) The goal of a market is to have real bona fide market makers with very tight spreads. HFTs tighten spreads but may bring some other negatives. The whole front running BS has nothing to do with HFT from what I can tell, and is just a misnomer. You can read what the CEO of IBKR has to say about some of this to get some color and I think. I'm sure there are many ways to manipulate the market, and I'm sure I don't know all of them, but I think it is too easy for folks to conflate a term that is nebulous at best (HFT) with a range of activities that take place in the market that may or may not be very applicable. In the end, it is far to easy to demonize what we do not understand well and it's easy for the mind to be lazy and not try to learn more. If anyone has some solid documentation about why HFT is worse than I've described above, I would be happy to read it... Ben PS - Long IBKR

Thank you both, that's what I needed!

Can't believe I can't find this, maybe I'm mis-remembering. Didn't Munger have a quote about needing to have the ability to hold two conflicting thoughts / ideas in your mind at the same time? Any help is much appreciated. Ben

4 People in the Portland (OR) area??? Wow... small world. I may have to organize a beer / coffee outing. Sanjeev, you are slipping after all those beers... ;-) we did have a "where you are from thread" back on the old MSN board. It was cool, it linked to a Google map so you could see everyone's location. Probably about 7 years ago... I don't think I was on the board long before it came up. Wish MSN didn't have to kill that old board... some great stuff there. Ben - Currently in Tel Aviv... looking forward to Portland again.

Portland, Oregon

From November '11. Bass "We now own no positions in Greece. We think all the Asymmetry is in Japan." 10-11 minute mark. Ben

Appreciate the correction on the Gross vs. Net here. I had thought what I had read was <$4B *gross*. If $70B is the Gross figure, I could see Bass being larger there. I also share skepticism of those who wonder about how accurate the Net numbers are, but after Lehman and Wamu went down, the cash trading hands in both situations was 4-7% of Gross as a data point which from what I recall was inline with the net #'s. Interesting to see what Bass makes here if he really is still holding some of this. Ben

Several things don't make sense: 1) Bass has said he sold most (all?) of his Greek CDS 2) There is reported only $3B (notional) Greek CDS outstanding 3) The "650 times" numbers don't account for the carry and all in cost of CDS which substantially lowers the % return on effective cost... and also doesn't take into account that Bass's latest AUM numbers are already marked up for the substantial gains he has likely already made as of last year on any sovereign bets. Would love to see the numbers, but sometimes trying to "break" news leads to erroring on being too extreme... this post made no sense me. I'll gladly accept being proven wrong, but my guess is that this is off by 50x. Ben