benhacker

Arbitragr said: ROTFLMAO... This thread will put that statement in a little context for those who don't remember: http://cornerofberkshireandfairfax.ca/forum/index.php?topic=402.30 Favorite quote by you Arb (made on April 13th with the stock above $14/share): Maybe you meant something I'm not getting from your comment but as someone who was massively long and getting longer WFC and preferreds during Feb-April and arguing with you and others about the merit of the idea... your statement above about it being a "fat pitch" (that you didn't own) seems ridiculous at best. Your other post (same thread, April 11th) questioning the integrity of WFC management right after they posted earnings (preliminary) walso seems odd for someone who thought the stock was a fat pitch. Cheers, Ben

Apologies for the slightly incoherent original post and accompanying typos... >:( Appreciate the links as well as a private email on the company. My interest here is gaining steam, and my basic focus is pretty simple: 1) Decent capital allocators are rare, and PICO on the surface seems like it may fit the bill. Buying great capital allocators at 60% of fair value seems to be a good path to wealth, so I'd like to add PICO to my watch list if they are legit. 2) Diversification - their assets are reasonably non-correlated with what I own on an economic basis. This is attractive to me. 3) Investment ideas - Any *true* Ben Graham style investor with talent is interesting to follow because you never know when you'll find some gem of a bank trading for 0.25x book or something rediculous. Those are my interests in this name... I'll try to do some more work and report back here. Water does seem like a potentially nice utility type income stream, and having a capital allocation team with a difference focus than my other investments will be good. Thanks, Ben

I'm not sure if this has ever been brought up here before, but here is a quick rundown: 1) Little conglomerate that does some a) Water Production b) RE Development and c) Insurance Runoff / Investing 2) They own about a 1m acres in Nevada and have a few operations in Colorado/California as well 3) Runoff operations have only ~10-13m in reserves left 4) Holding company appears liquid with $30m in bonds, $120m in stocks (global Graham style names), $96m in cash. Key value here is in the real estate / water rights. RE + Water assets are listed at $271m... I have not done any work here yet, but management seems to have a decent paper trail (and certainly talks the talk...) when it comes to book value growth. Valuation right now is just over book, but throwing some numbers around on land values it would be easy to say *real* book value is maybe 50-75% higher (I'm not saying this, but I see the appeal). Also, as a wild card they just capitalized a sub to go buy distressed developments in middle Cali… should be ripe pickings for those with patience. Some questions and several commens to put out there (and feel free to chime in anybody): 1) Does anyone know of any good (even dated) research report on this name? 2) I’ve attached the NAIC investment filing for the larger of their two runoff companies. Holdings aren’t crazy. They own a bunch of liquid stuff, some HRPT bonds, some Jeffries bonds, and then some small cap stuff hyper illiquide… anyone know their history here on the investment side? 3) Interestingly enough, they do have a small ($2m) investment in Boswell which is a illiquid OTC water play as well (I’ve done no work there) 4) They own a reasonable chunk of CTO (big enough that they actually have filed with the SEC on it) 5) They own some LAACZ which looks intriguing upon a 15 second inspection (Public storage company with a fitness center and hotel subsidiary (LA)) Anyway, some interesting ideas in there, and I like the look of the company on the surface. Salaries are higher than I like for a few guys, but intriguing idea to me. Can anyone add anything here, any thoughts on the possible value of the water/land assets? http://www.picoholdings.com/core-businesses.html http://www.unioncommunityllc.com/ http://www.nlrc.com/ Anybody follow this or have anything to add? No position for me yet, just started digging...

Kudos to Oldye and Ericopoly (I believe) who were definately in support of betting on the 10/30 Treasury yield spread widening. I thought it was a bit of an odd idea, but everything played out as expected, and the spread went from 30bps to 90bps. Hope you guys made some coin here in some way. Good call. Ben

Fine discussion, but I couldn't let this slide: Klarman???? I think you do not follow his methods closely. Rarely will he ever put more than 5% in an idea. His SEC filings as an example aren't even that concentrated, and they are roughly 20-40% of his asset base (if that). He is far from concentrated at least in the definition used on this board and in most investing circles. Ben

Kumar, Your initial sentence is ambiguous (to me) as to its intimation... i can see how you would be saying the "surprise" is not really a surprise, or that you are implying that the banks are somehow being nefarious. "I" understand the issue at hand, but it is not crystal clear from your post what "YOU" meant (after your second reply, I gather what you meant)... just an FYI. My first read was the same as JackRiver's... although, on another inspection, I can't really gather your meaning from only the words... These boards seem more testy than usual lately... we should all be happier! ;-) Thanks, Ben

Mandeep, since you own HUN and DOW, how about you tell US why you like them. Asking us about about a stock you own is likely to be a short conversation... Ben

While I think wipeout risk is real. The risk reward at $0.30 seems clearly positive. I took a small position this morning at the open. We shall see. Ben

Again, speculation is not required (generally)... the 13HR form states what subsidiaries of BRK own which stocks. GEICO is listed. Clearly there would be overlap, but you can see who owns what. See "Other managers". GEICO owns NRG... I'll stop slapping you now... Ben

Uhuru, you are really off your game. ;-) 7.2m SHARES, and a value of $126m The above says nothing about purchase price or cost basis. A 13HR form is just a snapshot... this one from 3/31/2009. Just do some googling and you'll find some articles on when the NRG purchase was first disclosed... it was in November of last year I think. Cheers, Ben

Mandeep, I'd avoid looking at the P/E of a company without looking at the cash/accrual accounting detail and most importantly its business model and moat. I don't own CRM, but some folks in an investment club I'm in have been digging into it. They may have the only model I've ever seen that is stickier than Microsoft's OS frachise. Simply stunning. Not sure it's a bargain, but at $4B it may be. Uhuru, See here --> http://www.sec.gov/Archives/edgar/data/1067983/000095013409010823/a52403e13fvhr.txt Buffett bought NRG and you spaced it. :-) Happened 9-12 months back. I'd taken a look at NRG and EXC and both looked good, but outside of my circle unfourtunately. Ben

JEast, Not sure where you are getting the 18% figure... no such luck. The variable series J does indeed trade at a big discount to PAR, but it's because it's paying 4% on par... but that doesn't not = 18% yields unless you are doing some math that I don't understand... Ben

Mandeep, based on your comments I would read Intelligent Investor (by Ben Graham) before I bought or sold anymore stocks if I were you. While these may be great or bad investments, your initial investments should start with understandable firms... simple businesses that sell a simply product with simply accounting. The above three have non of the above traits. I don't mean to discourage you from learning about investing, but beware of how deep you get yourself in without first gaining a better understanding. The stock market has not been known for its mercy. And most of all, do not ever forget that buying stock in a company provides you a claim on the profits of the company after all creditors have been paid. Assuming that Bank of America (etc) or some other highly levered company should be at least worth what it was 7 years ago may ignore the fact that if you are 9 parts debt to 1 part equity, it does not take much to make the stock a ZERO. This is part of the reason why there was so much disagreement on companies like Wells Fargo etc during the downturn. Banks (and any very leveraged entities) are very susceptible to economic downturns and liquidity events. Don't confuse huge returns from leveraged companies in short order as a sign of skill.... it may be good luck at best... and stupidity rewarded by a wreckless government at best. Good luck in your quest. You have found a good place to learn and grow, but do not oversimplify the investment process or you will regret it... maybe not today but someday. Thanks, Ben

JPM may be a great hedge, but betting against massive companies with moats and top rate management is just not something I'd do. If you are hedging disaster end-of-the-world type sh1t, than JPM makes sense. But just hedging a market decline, I would not do that. But again, this is more of a long term assesment by me (no position, but if forced, I'd be long).

Great ending to that article. I like Lewis. He seems real and his writing is engaging.

Yeah, i guess I don't find this data surprising, sobering, insightful, or anything of the sort. Stocks have sucked, and have had crappy yields for years. for the majority of that period in question, treasuries had some juicy yields. Anyway, just make money I guess. Ben I've been buying lots of fixed income lately, but most of it is rated 'junk'. Treasuries here are a bet on deflation, but they are not anything else. It may be a good bet, but these stats don't really say anything of value. It's the same with the "stocks for the long run" BS that just said stocks outperform inflation by X% but mentioned nothing of specific issues or VALUATION. Maybe I'm blind. ;-)

A major lesson in investing is that just because something sounds crazy, but works, doesn't mean it isn't crazy. The inverse holds as well. The fact is that buying expensive stocks will result in poor returns, and buying governments bonds at massive yield premiums to actual future inflation will work well. The problem is learning how to value stocks and how to predict inflation... let's see how that rolling LT treasury game works for the next 25 years. Ben

I will second the market action comment about financials today. BAC needs to raise $35B, WFC needs to raise $15B and they both are off to the races.... what??? I might be jaded since I was fighting with folks in a lot of places at $20, $15, and $10 about why Wells was a great choice, and now it seems that no one is fighting it anymore. The Short sale banning chatter and all this momentum just seems like the fix is in or something... Weird world. I have no take, there is still a ton of cheap stuff available and the hard part is not holding out for March 8th pricing like it will ever happen again. Wells Fargo preferred yielding 25%. I pray every night that happens again... Ben

Hey Scott, my thoughts: 1) Markel's insurance business is perceived (and likely is) better than Fairfax's on aggregate. It's niche-y and generates good combined ratios generally. 2) Their investment arm is perceived as superior (they are good, but they are not Fairfax) 3) Their loss reserves may be overstated (meaning book is actually higher). 4) Corporate culture is widely perceived as top notch - a rare event in this field. 5) The market may just be stupid, or maybe they are both great deals and FFH is just cheaper. 6) Fairfax is a more complicated business to understand (in my opinion) - emerging market subsidiaries, minority interest calculations, worldwide operations with cross holdings, short campaings, lawsuits.... it certainty takes a while to really understand this beast, that probably creates a hurdle in terms of analysis. I think so much about insurance revolves around management trust that there are probably many investors gladly willing to pay 1.25x book for MKL, but they just don't know, or never got comfortable with Fairfax. If Markel were trading only at a 5-10% book multiple premium to FFH, I would likely own it (although I confess to having only preripherally followed it for the last 9 months as it was really a no contest on which company I would invest in)... but I can see how many others would be happy with a bigger premium for MKL. They are both great companies, if you think the misvaluation is big enough, I always ask myself "Why not short one and go long the other?" Usually my answer to that question answers the 'why' of the valuation. The bottom line is that a 20-50% difference in P/B multiples is really noise for great companies... 20 years from now, who knows who will be the leader here in terms of stock performance. Long winded, but that is my thought. Ben

Agree. I have no desire to rate a poster, just the post.

Thanks for posting this! I found this interesting: And on China as a growth market (an opportunity for Falcon??): Cheers, Ben

Crum 10-Q is available for those who didn't peak. http://www.cfins.com/assets/downloads/financial/CFHC-10Q-04302009.pdf Major notes (I missed the FFH conf call) that I see: 1) $100m divied up to FFH after quarter close 2) Page 39 has an interest rate sensitivity table for the bond port - looks like the duration is 10 years. Increasing duration over the past few years, and up 10+% just this quarter (assuming again that Crum is representative of FFH which may be offbase). 3) Crum seems to be taking a more aggressive stance wrt to soft market as they are shuttering lines of business Just my quick read. Ben

Other than the fact they almost went under in the middle, it's a pretty great record. ;-) Don't get me wrong, I love these guys... just trying to temper and add some realism to your excitement. This is my largest holding.

Yeah, I think we can kill this feature if we decide to later. Personally I like to get feedback on my comments and posts, so I appreciate these kinds of rating features. It also is a helpful behavioral psychology tool to see what others think. Ben

What do these numbers mean exactly? Is this monthly beta, daily beta, quarterly beta? How far does it look back? One time period, 5 years ? Beta usually has a reference... such as the S&P or Wilshire 5000, so the fact that the benchmark to compare Beta against is at an all time high level of volatility should give you pause at to whether this metric has much meaning to you or not. This to me is another way of saying the FFH and Berkshire are similar because they are both holding companies that own insurance subsidiaries... this may be true, but that does not really imply they are very similar in reality (to me). But they do have some things in common no doubt. Thanks,