mcliu

When you say volatility, are you talking about price volatility, or cash flow (or value) volatility? If you're referring to historical price volatility as the risk of a stock, I would disagree unless the price perfectly reflects the value of the business.

Does Morningstar have anything equivalent to an "initiating coverage" report with very comprehensive information about the businesses? Most of the Morningstar reports that I've seen seem to be summarized notes on the company without any detailed information.

How do you tell if it's a structural change vs. a cyclical change? Can one not argue that telecoms and defense is going through structural changes as well?

Well society seem to value credentials over knowledge. From a strictly knowledge perspective, there's really no need to pay over 5 figures a year to learn in a classroom, when information is broadly available over the internet. Most professors (there are some very good ones that enhance your understanding, but those are few are far in between) merely regurgitate information anyways.

My university experience has been going to the first class, getting a course syllabus, and then spending the rest of the course at home reading textbooks and going to exams once in a while. Classes have added minimal value. In this day and age, if you really want to learn, all the resources are easily available online/offline. Wikipedia should save the day. The only thing missing, as most of you mentioned, is the willingness to learn.

Shares have been up 90% YTD. Is this a sign? Company seems to have ratified a new shareholders' rights plan lately.

PetHealth Inc

Inspiring. +1

That's an interesting question. I would like to see some data for that as well.. Or maybe we're just in unprecedented territory..

So you're saying large caps are overvalued and are dragging down the average yield? Not sure I buy that..

How does it work when yields are high on a company by company level, but when you average them, it's low in aggregate?

Is there an archived version of this board? Would be interesting to see what topics people were debating about in 2006/2007. :)

Anyone have any insights on how community banks compete with the large national banks? You would think the large banks like, ex. WFC, have a significant advantage given the cheaper cost of funding, large network and broader array of products, etc..?

I think ap1234 meant that, a lot of these bonds were marked on the books at above-par since yield would likely have dropped below the coupon rates of the bonds. (I think that's the case in IFRS where you mark most securities to fair value, right?) As these bonds mature, FFH would be receiving par for the bonds and taking an accounting loss. ex. Buy bonds at $50, bonds get marked up to $120 (+$70), bonds mature at $100 (-$20).

It's probably better to look at these hedges within the context of their insurance business, rather than just as a standalone investment portfolio. Rather than just value increases, these hedges can add significant amounts of value to the insurance business should the hedged events occur.

That's not a fair comparison since the management team cannot control the price that investors pay for the business. If you bought it in 1997 at an overvalued 5x book, when you should have only paid 1.5x book, and you lost money, that would be the investor's own fault. That has nothing to do with the performance of the business. The underlying intrinsic value of the business has increased 4.3x since then.

You typically use an EV/EBITDA multiple to compare valuations across companies since it adjusts for the differences in the capital structure. That way you're comparing the valuation on an asset level instead of just on the equity.

The shareholder that sells when a company buys back shares at above intrinsic value is better off since in most jurisdictions capital gains tax is less than income/dividend tax. (Not in all cases, for example, in Canada, "eligible" dividend tax rates are lower than capital gains tax rates for certain tax brackets.) However, the value destruction applies to the shareholder's that are not selling to the company. There's a trade-off point where, at a certain amount above intrinsic value, it may be still accretive to the shareholder on an after-tax basis, but above that point, it would not be. Time value also plays a role especially if it's a long-term holding.

In my limited interaction with sell-side analysts, I'd agree with this. And kiwing100's post is excellent. I've never had a sell-side job, but his last two paragraphs are spot on. Best, Ragu Agreed. In general, sell-side analysts have a great deal of understanding of the companies, and probably have a good sense of the intrinsic value of businesses. Unfortunately, they're paid to figure out where the price of a company will trade at in 12 months.

I think a problem with university education is that many Professors, particularly the research-oriented ones, aren't there to teach but rather to research. They don't particularly like teaching and aren't very engaged, or put in a lot of effort to help the students. With those courses, you're probably better off taking an online course. On the other hand, the few Professors that enjoy teaching and make an effort to make the material interesting/understandable make a huge difference.

Is it odd that Francis is warning about inflation while Watsa is concerned about deflation? Or is this just a time-frame issue?

I've been trying to find some exceptional managers, running insurance/reinsurance or investment operations, like Buffett/Watsa, but in earlier stages of their career. Any thoughts?

Tough to find attractive longs, so I thought I would look at the other side. :) Has anyone looked at Workday as a possible short?

Does anyone have any good short ideas?

Agreed. You're basically getting compensated more for taking on greater risk.