Sunrider

Yep - all for laws (except for law positivism or whatever you'd call what happend in the third Reich ... they had lots of laws, too). Issue is - is worth 42bn or whatever crazy number that's going to border patrol over the next few years? I mean I understand government is inefficient but how expensive can a high wall be? Hell you got all these minuteman vigilantes down there anyway watching the border and protecting the US from being overrun by the hordes of South Americans you fear. I say give them all a badge ... much cheaper than 42bn. Oh but it's your tax money so you're absolutely free to spend it how you want! Cheers - C. (in case it's not clear: I'm taking the mickey .. it's slightly amusing that people get so riled up about these topics, illegal immigrants and their violation of the law are probably the smallest real issue the US faces now). OK, if we give away citizenship to 11MM illegal immigrants, then who would pay $500k for an investor's visa? Simply come across the Southern border and stay here and then get your citizenship virtually for free? What kind of precedent is this setting? I am all for immigration, LEGAL immigration. If we want to allow 1, 10, 100, 1,000 or 1,000,000 Mexican nationals (or any other group) than that is fine, have the discussion and do it in orderly fashion. Screen who is coming in and set some rules. If law abiding Mexicans, Colombians, Canadians, Indians, Chinese, Vietnamese, Australians, English etc. wish to come here that is fine. Follow the rules and come legally. How are people going to feel that follow the rules? They are suckers, they have a distinct disadvantage playing by the rules. As to people who think this is a terrible idea, maybe we should just have totally open borders? Anybody who can get here is granted citizenship? Why even have border checkpoints? Why should some people have to take a civics test to become a citizen and others don't? Why have laws on the books and not follow them? Nothing possibly could go wrong!

Hiya Which series have you been buying? I saw a reference earlier in the thread about 17c/$1 but I can't tie this back to the quotes or price appreciation I can see over the last 1.5 months? Thank you - C.

Correct - residency/greencard first, but clearly you can then apply with pretty decent chances after you've been in the country for a while. In any event, I find this discussion a bit surreal and misplaced. Does the original poster really think the US 'brand' as such is diluted by naturalising (mostly hard working, otherwise they'd probably starve) illegal immigrants? I don't think so. What I can tell you (as someone living outside the US) is that what does damage the US brand abroad are revelations (unsurprising as they may be) a la Snowden, the disgrace (for a society built on laws and individual freedom, and the restraint of government) that's still going on in Gitmo, the joke that you previously called president, etc. So if you're really worried about the US' standing in the world, then that'd be the place to start. Oh - and I very much like the US so definitely not a 'french surrenderer monkey' for whom everything American is bad. Cheers. C.

You do realise that the US already does sell its citizenship? It's 500k - 1m and called an investors' visa. If you're really keen on making money out of your brand then perhaps just spend another couple of bn on higher walls on your southern border, forcefully implant every "real" citizen with a chip, kick out all the others and rigorously sell more of the above visas. Oh and I think you're forgetting that there are also cases where people resign their greencard or citizenship. Mostly when they've made lots of money. Just something to think about. And yes, I think, you're definitely wandering off into politics and perhaps that could go onto another forum. C.

I went to Freddie's investor page - Quantum lists more issues, hence my statement that I'm not sure whether their page is complete. Thus, I thought I'd go to a better source (here). I wouldn't have asked if I didn't think what was in the thread previously would be better than what I can find on their homepage :) C.

Hi there - for some reason it says "attachment not found" when I try to download it. Could you please re-attach or point me to a site/other source where I can find a list of all the issues? I'm having trouble with their Investor Relation's website (not sure if it really lists all issues) and Quantumonline.com also doesn't seem to have all information. Second question - at least for Freddie Mac, a lot of the series seem to be non-cumulative. Doesn't the case rest primarily on receiving what is being owed for the cumulative series? Are you buying the non-cumulative ones in the hope that they'll appreciate in price as soon as any payments to non-government preferred stock starts? Thank you very much! C.

I was about to say Good Luck. But I don't think you need it - you just need to know your stuff. Fortunately I did mine many many moons ago and from what I can tell standards have evidently slipped, so really, try to not think of it as luck. Just do your studying ;-) And to whomever commented derogatorily on Ethics - all I can say is that if you're dumb enough to fail that then you really do have issues and perhaps you should find something better to do with your time. C.

Hi Eric Picking up on your example earlier in the thread and for clarity (or completing the example) - are you basically saying "take 12$, and today buy 2 2015 12 calls at 2, then worst case spend 2 for 2 again in 2015, and once again to get to 2019' (roughly speaking, common and calls obviously moved up a bit). Is that the plan? So if the stock treads water for two years, you lose 4 (worst case), if it continues treading water to the 2017 roll then you lose 4 again. You've then spent all your cash. At 2019, if the common is above 12 + 12 = 24, you're making some money. If the common declines between the roles you buy more than 2 calls (either because you can get them cheaper, or you chose to trade down on strike for similar cost/number). If the common is above the above in 2019 then you make a bit more money .. .... does that capture it? Thanks - C.

Finbond is listed on the JSE - so tradable if you have a broker that allows you onto that exchange. I think my vote goes to Finbond here - the website also states that management owns 46% of the equity - which aligns with the statement in the Khrom letter. Unfortunately the attached report doesn't display correctly for me (p 36, point 5 referenced). Cheers - C.

Thanks for posting. Anyone know where I can find more information about Lender A (LEA) that is mentioned in Khrom Capital's letter. Autoinfo is another interesting stock owned by Khrom Capital: http://seekingalpha.com/article/1048651-autoinfo-a-growing-truck-freight-broker-not-priced-like-one Lender a = Finbond group in South Africa Yours Truly, Curious with how you came up with Finbond in South Africa. I was doing some research and my dots pointed towards SKS of India, but there are still a few holes in my story. If you'd like to exchange notes PM me since this was the SHOS thread. Thx Yes ... also interested - whether SKS or Finbond. New thread?

Is there some way to do this electronically from overseas (i.e. without printing and signing the forms on their site)? I'm with IB so want to go direct. When I click on that link on their site it directs me to BONY Mellon and it seems as though I need an account already. Thank you - C.

Not the same ... and perhaps easier to manage. I'm currently buying "distressed" (forced sellers, still some foreclosures) of condos and single family homes - seeing unlevered yields of 7 - 11% after operational management fees (which will run you at 7 - 10% for someone good as well). Seems a bit less hassle than a hotel - and somewhat less dependent on people travelling. Perhaps pick up some PEB next time Mr. Market marks them down? Cheers - C.

Sunrider, Instead of having a real margin call, IB seems to have an automated liquidation system; they will sell your equity for pennies on the dollar. In this sense, is it really worth it to have a margin account with them? Other brokers might have less flexibility and higher costs yet they might actually give a margin call with enough time to handle the situation. Would appreciate to hear your thoughts on this. Thanks. ... I suppose that depends on how close to the wind you expect to be sailing ... ;-) (You can tell the IB system which positions it should liquidate first in such cases though - but yes, they won't give you leeway once you hit the margin call point though - there are some warnings before though. Perhaps this way of doing things is also part of the reason why they are able to keep costs low - fewer/none? credit losses.) Cheers - C.

C, not much has changed from what we have discussed in the other threads: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/paulson-files-13d-on-hig/ http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/hig-warrants/ Only that the divestment plan was a success, with HIG becoming more of a P&C company, a very good P&C company. The Life parts that remain are also the most complicated, the ones they could not sell: (1) Japan: on schedule w/o causing too many headaches. With interest rates almost at 0 most of the headwind has stabilized and any depreciation of the yen (JEast?) or increase in interest rates is to their benefit. (2) US variable annuities: the US has not turned Japanese and it seems that interest rates will have to rise in a reasonable horizon. Also after studying this issue in depth I was surprised how well the hedging programs of AMerican firms performed in 2008. After reading the statutory reports, also I think they are very well capitalized, probably the best in decades. As said before, I don't like the CEO as much as I like Moynihan, Benmosche and Marchionne. He seems more of a bureaucrat and doesn't have the passion and knowledge of the business as these other guys. Thanks Plan. I may buy some more warrants over time. I suppose now that they have followed through with the spin-offs the question remains though when the market may accord them a higher multiple. Any quasi-catalysts you can see that aren't in the other threads? I've not had time to look at the reserving but I recall someone voicing concern about their aggressive rates/pricing a few years ago - has that folly worked its way through the system yet (presume P&C in the US short term)? C.

Interesting, so it works live a covered call (and that is precisely what I need). On the negative side it would use margin account. Would that work w/ Interactive Brokers? Maybe it's time that I move there and leave the old school way of doing things. Yes in many ways it behaves like a covered call - but the payoff function before expiration and as you approach the strike price of the long warrant will not be linear - i.e. not quite the same as doing a synthetic covered call (long call at 9.59, short put at 9.59 ... the fact aside that such a long maturity and the exact strike does not exist for leaps). In other words - as long as the warrant is deep in the money the delta will stay close to one and the warrant alone behaves almost like the stock (hey, and we sort of even get dividends!). The call you sell against it completes the "quasi covered call". However, if HIG were to fall precipitously you have two advantages compared to a traditional covered call: (1) your loses are "capped" at the warrant strike point (as opposed to zero); and (2) due to the long maturity the warrant will retain significant time value for a few years. The potential advantage of doing a synthetic covered call would be that you could also harvest the premium on the written put - at the cost of further downside, of course. So it comes back to how comfortable you are wit HIG. And yes, it would be a margin transaction. And yes, from where I'm sitting I can only say that I've been quite happy with Interactivebrokers (low fees, platform does everything I need and offers access to pretty much any market). Depending on whether you'd go with a Reg-T Margin account or a portfolio margin account the margin will of course turn out different. In my portfolio margin account IB charges me almost 100% of this particular warrant's price as margin - but that may have something to do with concentration (and then there's some offset again due to the short call). I believe you can easily look up the Reg-T rules on IB's website with examples. If I may ask - what's your view on HIG's prospects - on a P/BV metric it seems similarly attractive to AIG, BAC, MBI, etc. Do you own common and/or warrants? Large, medium, small position? Thank you - C.

Hi Plan Well, you could try a trusty old diagonal - the warrants are almost at a delta of one since they are so deep in the money. So buy 100 warrants and sell one call option against it. Today's trading at above 24 - perhaps Mar 13, 26 Calls @ 0.4$. In an ideal case (never is) you would be able to rinse repeat about four times a year for another 6.5 years or so. If you can capture .4 in value every time you'd end up recovering about a two thirds of the cost of the warrant by expiration, before fees. Of course, it all depends on how fast you think HIG is going to move and thus where you are able to set the strikes for the sold calls. On the plus side, if the stock runs away you'd still make money on the differential as the warrant would likely increase more than the written call. On the down side ... well, how comfortable are you with HIG at these prices and do you believe they'll get back to TBV? Thanks - C.

Thanks for the input - both of you. C.

Thanks Plan. JRH - I suppose the one potential issue with short common/long warrant is the carry cost for the short (plus div). Of course volatility could deflate the warrant price as well but then again I'd wager we're in for rather more than less volatility (also at mid 30s it's not that high). Would you try and do a ratio transaction to get to an initially delta-neutral position or what's your approach to doing something like that? Cheers - C.

I just nibbled at the warrants - Plan, did you ever get into HIG or still passing? thanks - C.