LC

Gio I agree with your post above regarding what to expect in terms of gains...I'd rather take 6% for years when I have no flashes of brilliance (and believe me, there are many) and then take a 50% gain in 1-2 years when I do have a good idea. I also like this quote from Mr. Marks, because it really boils down common stock investing: And I'm only through five pages!

Does it? Isn't the story always the same in the insurance industry: "we just HAD to write more business!"

How do you think the fixed income market will affect the equity market? The FI market seems to be totally dependant on the Fed at this point. If the Fed raises rates and bond prices tank, the ~20x PE I'm seeing on most stocks may turn to 15x as prices fall. But the issue is, is the US healthy enough for the Fed to raise rates? I'm not going to presume to know what the Fed thinks of the US economy's health, so I guess the move is to take profits on the more liquid dividend paying stocks that the artificially low interest rates are propping up to overvalued prices. I don't think the undervalued small-caps whose revenues aren't tied to interest rates will be sold as much as a large cap dividend payer.

I hope you're right, but I make no such prediction. In my opinion, I only touch highly levered derivatives when the risk/reward is so skewed I would be comfortable "losing it all". Therefore the price has to be so depressed that a total loss would not be catastrophic, and at the same time A LOT of things would have to go wrong to lose total value. Obviously these situations do not occur frequently. I am not sure of the risk/reward or even the notional amounts of Mr. Watsa's hedging positions, but I am sure of the fact that he is very intelligent. Additionally he has created an excellent organization which would allow him to make a mistake or two if he "got nervous" and purchased such a large hedge.

All the while, of course, Mr. Buffett has been ALL OVER the press! It reminds me of what White Sox coach Ozzie Guillen would do for his team. Ozzie was such a controversial public figure that all the attention was on his antics and outbusts rather than scrutinizing the performance of his team!

the table at the top of page 19 should answer your question. CPI hedges are separate from equity hedges. there is a cumulative 1.8bln loss (which i presume is an unrealized mark to market loss---although some may have been realized as they roll over derivatives into new contracts i suppose)

Same situation here.

It's why I use Ajay's team at UBS. They will work the trade for us at their trading desk, and then we are charged solely on a per share basis. Otherwise, you will have to look for blocks that are offered and try to buy them. Cheers! "work the trade" Care to explain a bit of the strategy behind that? I believe it just means to attempt different strategies to get the best execution for large blocks of shares, usually illiquid ones. "pinging" for limit orders, doing stuff with VWAP (I'm no trader so I don't know the intricate details...)

Regarding CCH, is it really that cheap? A cursory glance shows a P/E of 38...other bottler/distributors are trading at lower multiples...COKE @ 27x and KOF @ 33x Also, linked to the SSW thread in the investment ideas section, can anyone speak to Greek shippers?

I'm quoting myself because I still think the above. If you're going to forecast weekly / monthly stock price movements, yikes. Buffett said it: he can't predict how the operating businesses he OWNS will do in a month, how anyone thinks they can do so for the stock market is beyond me.

It seems like a good strategy to use when there are temporary overvaluations, but you expect there to be a continued undervaluation in the future.

i still think it's brilliant business to own the company that creates diabetes (KO) and the company that treats it (DVA)

Can you direct to any sources on these types of option strategies? I.e. using options to maneuver into/out of a position for an indirect benefit. I.e. avoiding taxable events, selling puts to enter a position, selling calls to exit a position, etc.

Pretty sure if you get into either you'll be OK as far as networking etc goes. Columbia will give you a more value-focused education I would assume. But both are obviously at the top of everyone's list.

The question was directed at Sanjeev but I personally purchase a small tracking position and go from there. FYI I purchased a small tracking position in SD today as well. It's just so damn cheap...we'll have to see what the market does with it the next few days/weeks.

Took me about a week of confusion before I figured it out. ;D Happy 11th!

You did not need to know BRK's value when it was trading at BV to know it was trading well below IV and a great buy. This. I agree, but only in very selective circumstances. In this case yes, for two reasons: 1. BRK is a huge company, and estimating an intrinsic value would be very difficult. 2. We're all value investors here. We know about Warren's life, his character, his ethics. It's easier to read stories and letters and assess Warren's character as a business partner than it is to value his businesses. So when you have a partner you trust telling you that IV > BV, and he's also telling you he's willing to buy back shares at 110% or 120% of BV, you can trust that moreso than a lot of the other uncertainties in the stock market. So in this unique case I think it's OK to invest without knowing an IV range.

Or tollbooth company

onyx1, where did you find the info on the preferred. The few links I've read don't mention it or have any detail. Pieced together from these links: "Berkshire and 3G will each contribute about $4 billion in cash to pay for the deal, with Berkshire also paying $8 billion for preferred shares. The rest of the cost will be covered by debt financing raised by JPMorgan Chase and Wells Fargo." http://dealbook.nytimes.com/2013/02/14/berkshire-and-3g-capital-to-buy-heinz-for-23-billion/?partner=yahoofinance "Berkshire will spend about $12 billion to $13 billion on the deal for the maker of condiments and Ore-Ida potato snacks, Buffett told CNBC. The deal will also be financed with cash from 3G affiliates, plus the rollover of existing debt, and is valued at about $28 billion including debt, according to the statement." http://www.bloomberg.com/news/2013-02-14/berkshire-joins-3g-capital-to-buy-heinz-in-28-billion-food-deal.html?cmpid=yhoo Buffett really likes these preferred deals! Any reason why? My guess is they provide a nice midway point between bonds and common equity for Buffett's insurance reserves.

I didn't look into it but Bollore (XPAR:BOL) might be an option. David Marcus from Evermore Global Value Fund has invested in it. In this interview he talks a little bit about Bollore: http://finance.yahoo.com/news/evermore-global-value-fund-portfolio-235900501.html What about Lancashire, they're popular around these parts as well...

I did a double take on that too! Back when Larry Auriana had some hair!

Well, let's rationalize it by saying that he didn't invest in "newspapers", but branded and trusted information providers.

I have followed them and read them since the late 90s (shareholder for a small portion of that) but in the last two years the quality seems to have gone downhill. Marty's section seems more like an old professors rant then as educational as it use to be and the others have become more mainstream and less candid or informative. Am I missing it and they stayed the same but maybe I have changed. You know, I think you are right, the quality has gone down in recent years. However I'm willing to give them the benefit of the doubt for a while given Marty's history.

How could we forget Marty Whitman's Third Ave Funds? http://www.thirdave.com/ta/shareholder-letters-mf.asp

The S&P500 earnings are around $105 and it's at 1517...so roughly about 15 times earnings. Neither cheap, nor expensive historically. It won't provide you returns larger than growth in GDP and inflation plus dividends. You also have no boost from interest rates, nor profit margins, which are at historical lows and highs respectively. Cheers! Sanjeev a question for you...do you attempt to do a rough calculation of the free "call/put option" of cash? It seems to me that this cash option has an inverse relationship with the market P/E. To state the obvious, when prices in the market are high (on average), cash's option is more valuable because the market has more downside. Do you think along these lines at all in terms of holding cash, or do you just say to yourself, "well, everything's expensive, and I wouldn't buy some of what I already own at these prices...so let me sell a bit and wait until things get cheaper"?