LC

Everything in Denver priced under 2022 peaks is getting snatched up. The only stuff sitting is the stuff listed as if we're still @ 2.5% rates.

It's essentially riskless, but yes theoretically it could be. You agree to lend your shares out, there is a chance the ultimately counterparty(s) may fail to deliver to the central clearing house (DTCC/NSCC). For anyone who cares about the plumbing: https://www.researchgate.net/publication/228260887_Naked_Short_Sales_and_Fails_to_Deliver_An_Overview_of_Clearing_and_Settlement_Procedures_for_Stock_Trades_in_the_US

Reminds me of the original hedge funds: the idea of being 100% invested in the index, then hedging out (either long or short) individual stocks the manager found under/over valued.

One further question - when you do sell individual stocks, do you immediately reposition into the index?

So interestingly enough the below article hit my inbox this morning: https://specialsituationinvesting.substack.com/p/focus-and-investing?publication_id=903552&utm_campaign=email-post-title&r=1kl6gs The author looked at some of WB’s early partnership trading/investing behavior. His conclusion is not all too different than what you describe above, Viking. What really stood out to me was WB’s aggressiveness in minimizing opportunity cost: Buffett focused completely on finding the next great opportunity and moving into it in as big a way as possible without regard for systems. He identified opportunities by spending the limited time he had studying what was knowable and important while largely ignoring the rest. He formulated a clear idea of intrinsic value in his mind and then refused to overpay. He then used opportunity cost as a framework to constantly move capital from his worst ideas into his best such that he could maximize his returns. A lot of people (myself included) think concentration is 5 equally weighted positions. To Buffet I’d imagine that is 20% your best idea, and 80% worse ideas. So yes you are concentrated- but in sub-optimal ideas! Anyways I think between the article and your post it provides a good spectrum of how WB achieved massive wealth and some points take away.

This being an election year may be an influence as well.

When using leverage you want lots of ways to win and only a few, hopefully known, ways to lose. JPY is where I could see using leverage -low interest rate, so the carry cost isn't going to kill you -purchasing stable, undervalued assets, hopefully even with a dividend that covers the carry -has a macro theme in your favor (Japan, Buffett, etc.) Even Fairfax (maybe a year ago) would be another one. -Industry tailwinds (hard market) -Stable, known earnings -Stable FX -Tempered macro environment (Powell could be content raising, holding, or lowering rates - but nothing drastic) Size it so there needs to be a really large macro swing to really hurt you, i.e. great recession/COVID style thing. Sell, take your capital loss, and buy options to the upside.

I trimmed <3.3% of my FFH a week ago thinking: OK this is getting a big chunk of the portfolio now, So let's take some eenie-meenie little profits, And given FFH's volatility maybe I can buy it back in a few days/week. That was $60 dollars per share ago. I can't help but get in my own way sometimes. That said the position is still close to 40% weighted. Luca, haven't I seen you posting in the "What are you buying" thread on a very regular basis?

John oliver has done some decent episodes on relevant business/investing topics. I won't say I always agree with his conclusion or even how he presents the evidence, but I will give him credit for at least giving airtime to topics that nobody else would.

I usually don't but will go up to 20% or so.

Well, he could do another tax free swap similar to what happened with Berkshire and Graham holdings. I wonder - could Berkshire fund a credit line to Apple, allowing Apple to buy some asset(s) Berkshire desires (perhaps including Berkshire's own stock). And then they can affect a tax free swap?

Try some backwards engineering. Look at a small cap growth stock which has done really well, and look at the first few years of financials. See what metrics stick out to you and try and replicate that.

No I don't think it's fundamentally flawed, they mention a strong LTV for the properties supporting the deal - at its core it looks to me like Fairfax is helping out a partner who is in a poor market right now. And throwing in for some equity as well. OK fine. But it just seems like a reach, similar to continuing to fund Blackberry. At small amounts and with long-term partners, OK I am willing to extend benefit of the doubt. But this kind of cheeky stuff is how they went about putting on billions of deflation hedges. FFH as an investment continues to work if they just stick to (around) their knitting and not trying to outsmart everyone in every market.

Yes - but that’s just part of the picture (which you have done a really great job illustrating to this entire board). Rates going down would of course present reinvestment risk for FFHs large fixed income portfolio. And similarly on the flip side, rate increases provide an opportunity. And it’s important to note management has done a great job taking advantage of 2023’s rise in rates. But what will falling rates do to the rest of the income streams? I’d imagine the equity portfolio would rise. And low rates would be a barrier to entry in the insurance market. At the end of the day whether I think rates will rise or drop (I don’t have a strong opinion but I lean towards ‘higher for longer’), I think it presents opportunities to Fairfax either way. And management has done a good job these past few years on the big decisions (I have a more mixed opinion of them on the smaller deals eg blackberry, KW, etc).

Viking- appreciate your ongoing analysis. While implying FFH may be still cheap as the share price appreciation (+~100%) has not kept up with op. Income growth (+~330%), i think to really come to that conclusion you have to break out the components of op Inc. and assess the growth and durability of each. For example performance on the fixed income portfolio are dependent on interest rates. It may be difficult to project that component. Point is I do not think share price vs op income is a 1:1 relationship, although I personally tend to agree it should be closer than 3.3:1!

Not me but I did put in some low limit orders just in case someone wants to make repeat sales

Could you share the current status summary? I stopped following about a year ago, I wasn't super impressed with management.

Largest I had was 2400 sqft and it was way too big. 3 rooms went totally abandoned. Downsized to 1100 sqft post-divorce and it’s perfect for just me. With a partner I am looking at maybe 15-1600 sqft and that will probably feel roomy!

Bit late to the party here: Fairfax: 40% JOE: 12% Citi: 8% CLPR: 5% (shoot me pls) Aecon: 5% AIV: 3% MSGE: 3% FRPH: 3% PCYO: 3% STNE: 3% About 20 small positions: ~15% The above constitutes 75% of my active portfolio, cash is 25% of the remainder. Decided to pull some cash when the S&P hit like 4700, then took a month holiday, just getting back into researching. So that cash position I hope to reduce over the next month or two.

Im not sure I buy the “less efficient” pricing for illiquid microcaps. Large caps have tons of investors- and are perhaps more prone to herd thinking? After all take a look at 30+% gains/drops in large caps over the past years. Ultimately you have to do work. Large caps the info is easily presented but there is just so many moving parts. Micro caps are easier to understand but may be a lot of work to get all the relevant info.

Good question and a bit different from the “best idea for 2024…” potential question. i think over a 5+ year horizon, healthcare is a good bet. Demand is not going to decrease, and prices will follow suit. Technology (as an alternative consideration) will always be improving, but it’s difficult to find winners over a 5+ year horizon. If I had to guess I would say visual AI technology.

Quite the sake trip out here - just had a yuzu-infused super refined sake that was delicious.

Happy New Years to all!

looks about 30% overall. >33% FFH position was the leader, strong contributions by JOE, SNC Lavalin, Petrobrasil, and bottom ticking Aecon. Biggest donkers was Clipper and Televisa. Strong props to the Citi buyers turning that into a positive position by year end. I look forward to existing all 3 as I don't want to be long term owners or any, except perhaps if TV spins its soccer team. Biggest mistake was not trading better around core positions. MSGE approaching 40 post-spin is the one I remember best.

You’re right, the stock is cheap but it’s a super small position for that exact reason!