barminov
-
Posts
42 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by barminov
-
-
2 hours ago, Castanza said:
If I had to guess at what happens? Ukraine receives a haircut in the landmass department. Russia takes pro Russian/Russian speaking eastern Ukrainian regions and establishes a border they feel more “comfortable” defending against NATO. Who knows though, this stuff is never predictable.
Realistically, the whole NATO thing regarding Ukraine is a Red Herring. Latvia, Lithuania, Estonia are NATO countries, take a look at how close to Moscow/St. Petersburg they are relative to Ukraine. Most of Russia's population already lives very close to a NATO country.
What Putin/Russia fears is seeing a country that most Russians can identify with, succeed. Once Ukrainians got visa free travel to the EU, a lot of Russians said wtf? Imagine if things in Ukraine kept improving and what would happen if Russians 20 years from now saw their "little brother" doing better than they are.
-
2 hours ago, Castanza said:
From an outsiders perspective the country seems to be very fractured regarding support for and against Russia. Just curious if you could break it down. There is definitely some support there for Russia (probably a minority). If I had to guess most pro support is in the older generations who look back with some nostalgia of a “united purpose” while ignoring the terrible conditions they endured under the Soviet’s. Didn’t Crimea have a 97% vote to join Russia back in 2014 (example of pockets of support).Situation is very complex and I wonder if sanctions will just escalate matters. Further, sanctions on Russia will also affect Ukraine. I thought the below video was the best no bullshit no bias explanation of the situation.
If I had to guess at what happens? Ukraine receives a haircut in the landmass department. Russia takes pro Russian/Russian speaking eastern Ukrainian regions and establishes a border they feel more “comfortable” defending against NATO. Who knows though, this stuff is never predictable.You're absolutely right about the type of people that support Russia...it tends to be the older crowd. Partly nostalgia, partly some sort of yearning for the "greatness" of the Soviet Union. The Pro-Russian population is in the South and East of the country...think the Ukrainian version of the "Rust Belt." The thing is, before the annexation of Crimea and the DNR/LNR, there was a sizeable % of the population that supported Russia. Now, its around 10%, at best. The regions/areas that were extremely pro-Russian are no longer part of Ukraine.
Regarding the vote in Crimea, it happened after the "little green men" (Russian regulars) took over the peninsula. No sane person will argue that in an honest vote, Crimea wouldn't choose Russia, but the numbers are skewed because your vote will be different when someone is holding an AK 2 meters behind you. 20% of the Crimean population are Tatars. You can read about what the Soviet authorities did to them, but there's no way they are voting to join Russia. I think in an honest vote around 70% would vote to join Russia.
-
14 hours ago, Gregmal said:
Man! Where’s @Read the Footnoteswhen you need him? All those experts on psychological analysis declaring Trump a Russian puppet….the fella they voted for seems mighty effective. Ukraine going back to Russia. Arguably where it belonged to begin with as a huge percentage of Ukrainians consider themselves Russian and support Russia. It’s basically been a self serving US/EU initiative to steal Ukraine and the bulk of that region following the Cold War. IMO this is largely much ado about nothing. But the beauty? Nat gas is gonna go through the roof and $120 oil ain’t too far off either. Been debating picking up some $200 CL calls. It’s closer than everyone thinks.
Agree with you on oil and gas, and am positioned accordingly.
Respectfully though, you have no idea what you're talking about with regards to Ukraine. I was born and raised there, have relatives, friends, business colleagues there, even now. When you claim that most Ukrainians are pro-Russian, can you give me a source? Mind you, a lot has changed since 2014, something current would be appropriate.
-
14 minutes ago, petec said:
How certain are we about this? Bloomberg still says 30.55 million.
30,548,190 shares
The incorrect number is listed in the AR because of the RiverStone transaction.
Also, the dividend is in US $.
-
What filing was that? In the Q3 report they stated "During the third quarter and first nine months of 2020 the company did not initiate any short equity total return swaps"
NAIC filing for Q3. It's possible that they just re-upped/recast an already existing TRS and therefore, didn't technically "initiate" it at that time, but the fact remains that they did this during Q3.
-
What are your examples where they disclosed a trade that wasn't a sale or a purchase of shares of a company but didn't have to?
You seem to have a longer history with the company than I do. I took Prem at face value from the conference call.
Well, I guess they don't have to discuss anything but from very recent examples, Prem gave dollar amounts of gains from General Motors and Lumen which were both mainly from Total Return Swaps, but there is no mention of the loss on Tesla TRS which was much bigger.
But Daphne's CDS example is the classic, big example of this.
Did I miss something? is it a known fact that they've ever had any exposure to Tesla specifically? I thought it was just conjecture.
The company has never mentioned it but their filings say that on September 11, 2020, they entered a TRS on an "Auto Munufaturing (sic) Co." at a strike price of 372.72 with a notional amount of $128.7m that would benefit from a decline. TSLA closed on September 11, 2020 at $372.72.
-
What are your examples where they disclosed a trade that wasn't a sale or a purchase of shares of a company but didn't have to?
You seem to have a longer history with the company than I do. I took Prem at face value from the conference call.
Well, I guess they don't have to discuss anything but from very recent examples, Prem gave dollar amounts of gains from General Motors and Lumen which were both mainly from Total Return Swaps, but there is no mention of the loss on Tesla TRS which was much bigger.
But Daphne's CDS example is the classic, big example of this.
-
They don't disclose it because they have a policy. If they didn't have a policy they would have to decide on each portfolio transaction if they should disclose it or not.
It just sounds like you don't like the corporate culture or the long term orientation. Not every stock is for everybody, that's what makes a market.
What's the policy? They discuss plenty of their investments why not these?
-
As a long time follower, and at times shareholder, of Fairfax, that letter was very disappointing.
After the last conference call, it should have been pretty obvious to everyone at the company that shareholders want to know what, if anything, was done with BlackBerry. Prem side-stepped this and gave his usual: John Chen is great and we like him. Cool, but everyone that's followed the company for longer than a quarter already knew that. Shareholders are more interested in why several members of the investment team (including Wade Burton who he later praised for doing a great job) sold shares of BB during the run-up and FFH seemingly did nothing. If there's some reason they couldn't/didn't want to, say so but don't just avoid the subject altogether. Even a simple: "we can't talk about it" would have been better.
Second, there was no discussion at all about their Tesla short. From the 2018 letter:
"After much thought and discussion, it became clear to me that shorting is
dangerous, very short term in nature and anathema to long term value investing. As I mentioned to you in last year’s
annual report, shorting has cost us, cumulatively, net of our gains on common stock, approximately $2 billion! This
will not be repeated! In the future, we may use options with a potential finite loss to hedge our equity exposure, but
we will never again indulge anew in shorting with uncapped exposure. Your Chairman continues to learn – slowly!!"
Yet they decided to not close out the Tesla short total return swap and kept extending it. On the conference calls, they made it sound like they were working through it, winding it down and there was just a little more left. This is deceptive at best. It's a short total return swap with Bank of America as a counterparty. I'm not a derivatives trader so I might be wrong here but I'm pretty sure you just pick up the phone and close the trade, maybe pay somewhat of a premium to get out. Instead, as late as September 11, 2020, they re-upped it for a notional amount of $128.7m at a strike price of $372.72. That sure doesn't jive with the statement made in the 2018 letter. At some point in 2020 they finally closed it out and yet the current letter basically just says "hey, we closed a short after losing a bunch of money." Maybe after a huge loss like that some discussion is warranted? Hell, I agree with them and this position but their timing was off and they got burned. If they explained the logic/thinking behind why they did it (it's crazy overvalued), explained what happened (the price kept going up with no rhyme or reason), and said "we learned once again why shorting without limiting your downside is dumb, we won't do it again" it would have been a lot better than the way they did handle it which was essentially an insult to everyone's intelligence and/or a hope that no one is paying attention.
Third, and by far the least important, it's Ukraine not "the Ukraine." This is mainly just a pet peeve of mine but "the Ukraine" is what Russians called it when it was one of the Soviet Republics because it was a region in a larger country (like the Great Plains, the Northeast, the Rockies etc). 99.9% of people don't/won't and shouldn't care but the people that might are the people in the Ukrainian subsidiaries that Prem is trying to praise. Interestingly enough, he got it right in the first part of the letter and switched to "the Ukraine" in the latter part. Anyway, at least he got Colombia right.
Maybe they did an inverse total return swap on BB. Would be really easy for them to do since they can lend their own stock to the counterparty. We probably just need to see the Q1 report in less than two months and you might have your answer.
How big a number in investment gains in Q1 will make you happy even if you don't know BB gains are part of it? Do you have an estimate with BB marked to market? Some of the big names have moved up a lot so far in 2021.
I am just speculating of course. FFH did a long total return swap on its own stock and didn't have to file anything on SEDI. It would follow, it's the same if they entered into an inverse total return swap on BB.
Why would he ever say anything if that's the case? Better to be the supportive long term shareholder for BB's sake which is of course in our best interest too.
To me the BB issue is about a lot more than whether or not the investment gain was realized in Q1 and the size of the gain. Generally speaking, I'm a very long term investor. Whether or not they realized this gain doesn't change the long term value of the shares all that much. What it does change radically though, is my assessment of FFH's management, their disclosures to shareholders, and the suitability of the company to be a long term holding in my portfolio. With their actions over the last 5-10 years, they've lost their place as a long term holding in my portfolio. If they've done nothing with BB and refuse to acknowledge it/talk about it, that just reinforces my belief that FFH is not a suitable long term holding. Like I said earlier, there could have been reasons why they couldn't do anything or didn't want to do anything, but as a shareholder I'd expect to hear about those. "John Chen is great and we like him" doesn't work for me. The TSLA short is in exactly the same bucket. The lack of discussion/disclosure, and continuing to do something they said they wouldn't is a much bigger issue to me than the actual loss.
Could they have realized the BB gain through a TR swap? Sure and maybe they did but what's the benefit of not disclosing this to shareholders? So John Chen doesn't find out? They could have easily told him: "We have no plans to sell BB but we're going to take advantage of the temporary price move with a TRS. Keep doing what you're doing, we're not going anywhere." I thought this was exactly what was happening when BB issued the press release that said we're not aware of anything happening to cause the share price movement. That gave insiders the all-clear but so far, it looks like nothing happened on that front.
EDIT: Just to be clear, I do see all the positives (huge improvements in the insurance subs, the gains in a lot of their holdings, etc) and I am currently a shareholder but because of these issues and several other things over the last 5-10 years, I'm along for the ride temporarily, not a long term partner.
-
As a long time follower, and at times shareholder, of Fairfax, that letter was very disappointing.
After the last conference call, it should have been pretty obvious to everyone at the company that shareholders want to know what, if anything, was done with BlackBerry. Prem side-stepped this and gave his usual: John Chen is great and we like him. Cool, but everyone that's followed the company for longer than a quarter already knew that. Shareholders are more interested in why several members of the investment team (including Wade Burton who he later praised for doing a great job) sold shares of BB during the run-up and FFH seemingly did nothing. If there's some reason they couldn't/didn't want to, say so but don't just avoid the subject altogether. Even a simple: "we can't talk about it" would have been better.
Second, there was no discussion at all about their Tesla short. From the 2018 letter:
"After much thought and discussion, it became clear to me that shorting is
dangerous, very short term in nature and anathema to long term value investing. As I mentioned to you in last year’s
annual report, shorting has cost us, cumulatively, net of our gains on common stock, approximately $2 billion! This
will not be repeated! In the future, we may use options with a potential finite loss to hedge our equity exposure, but
we will never again indulge anew in shorting with uncapped exposure. Your Chairman continues to learn – slowly!!"
Yet they decided to not close out the Tesla short total return swap and kept extending it. On the conference calls, they made it sound like they were working through it, winding it down and there was just a little more left. This is deceptive at best. It's a short total return swap with Bank of America as a counterparty. I'm not a derivatives trader so I might be wrong here but I'm pretty sure you just pick up the phone and close the trade, maybe pay somewhat of a premium to get out. Instead, as late as September 11, 2020, they re-upped it for a notional amount of $128.7m at a strike price of $372.72. That sure doesn't jive with the statement made in the 2018 letter. At some point in 2020 they finally closed it out and yet the current letter basically just says "hey, we closed a short after losing a bunch of money." Maybe after a huge loss like that some discussion is warranted? Hell, I agree with them and this position but their timing was off and they got burned. If they explained the logic/thinking behind why they did it (it's crazy overvalued), explained what happened (the price kept going up with no rhyme or reason), and said "we learned once again why shorting without limiting your downside is dumb, we won't do it again" it would have been a lot better than the way they did handle it which was essentially an insult to everyone's intelligence and/or a hope that no one is paying attention.
Third, and by far the least important, it's Ukraine not "the Ukraine." This is mainly just a pet peeve of mine but "the Ukraine" is what Russians called it when it was one of the Soviet Republics because it was a region in a larger country (like the Great Plains, the Northeast, the Rockies etc). 99.9% of people don't/won't and shouldn't care but the people that might are the people in the Ukrainian subsidiaries that Prem is trying to praise. Interestingly enough, he got it right in the first part of the letter and switched to "the Ukraine" in the latter part. Anyway, at least he got Colombia right.
-
A side note, but an interesting one:
Eurobank span out 75% of its Cairo mezzanine and junior NPE tranche in September. These are listed on the Athens exchange as Cairomez and Fairfax has about 30%. As of today this stake is currently worth approximately nothing.
However, I believe the underlying portfolio has:
- c. E12bn of credits.
- c. E7.5bn of credits after provisions.
- c. E4bn of real estate collateral, and this may be rising with Greek real estate prices which have turned the corner.
- c. E2.4bn of senior debt.
It's not impossible that Cairomez is worth the value of the real estate less the value of the senior tranche (the mezz get paid after the senior tranche has been repaid in full with interest, and after all admin and servicing fees). God knows what that's worth now: I have no idea how long it will take to work out, what the fees are, or what discount rate to use. But these notes are a potentially valuable option on the Greek economy reflating. It has basically been in a depression for a decade and has done a lot of hard policy homework in that time. There is evidence that it has turned (loan books growing despite covid, real estate prices rising).
doValue, the servicer, owns 20% of the mezz/junior. Eurobank retained 5%.
Slight correction: they sold 20% of the mezzanine and 50.1% of the junior to the servicer (see: https://www.eurobankholdings.gr/en/grafeio-tupou/etairiki-anakoinosi-24-07-20).
So, Cairo Mezz retained 75% of the mezz and 44.9% of the junior (the other 5% of each are at Eurobank). The notional amounts of Cairo senior, mezzanine and junior notes are as follows: €2.4 billion, €1.5 billion and €3.6 billion respectively. Using those numbers, Cairo Mezz has €1.125b of mezz at notional value and €1.62b of juniors at notional value.
The press release (https://www.eurobankholdings.gr/en/grafeio-tupou/etairiki-anakoinosi-05-06-20/) that announced the deal with the servicer said:
- 20% of the mezzanine notes and the minimum required percentage of the junior notes are sold to doValue for a consideration in cash. The implied valuation based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes corresponds to 33.3% of the total gross value of the securitized portfolio.
If I'm understanding this correctly, they got paid cash of €97.5m for 20% of the mezz and 50.1% of the juniors. (Edit: I wasn't understanding it correctly because Eurobank got paid €14m for them according to the Q3 report). The remaining 75% of the mezz and 44.9% of the junior, with a combined notional of €2.75b, are currently trading at around €30m.
-
Southern California Edison rates:
31c per kWh for Tier 4
On a tiered plan, you typically will wind up offsetting the 31 cents first. Once the Solar Panels generate enough electricity to knock you down to the next Tier of usage, you are paying 27c.
So basically, Solar City can easily beat those rates and still earn a good rate.
Oh yeah, there's no doubt it makes sense in some scenarios. Keep in mind though you're talking about the highest tier in the state which has the 6th highest average rate of electricity in the country (Source: http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a ). The average rate for CA is around 17 cents. I'm in Los Angeles and our highest tier during the most expensive season is 21.5 cents. Even so, I was doing some back of the envelope calculations for a household in my area and installing solar would yield mid-teen returns (after federal and state incentives). I was just pointing out to yadayada that in his back of the envelope calculation for the power consumption of the entire United States, using 37 cents per kWh isn't appropriate.
I'm wondering if one were to sign a Power Purchase Agreement with Solar City, what kind of rates they would charge. Hypothetically, if someone was with Southern California Edison (Tier 1 - 13 cents, Tier 2 - 16 cents, Tier 3 - 27 cents, Tier 4 - 31 cents), and Solar City quoted a PPA for 20 cents a kWh, you would only get a system big enough to get you down to Tier 2 and no more. Has anyone received a quote?
From their annual report I see that cost of installation is about $3/Watt so a 1KW system would cost them roughly $3000. This should generate between 1400-2000 kWh in California (more in SoCal, less in NorCal). Say 1700 kWh on average. If they sell this to the customer at 17 cents a kWh (average for CA), they get revenue of about $290/year. Federal and State incentives would bring the cost down (I have no idea what kind of incentives they receive) and maintenance would eat into some of that. Anyway, the stock looks absurdly overpriced but I'm off to do more reading since the industry is interesting and I'm realizing I don't know enough to even ballpark what they/any other company in the industry could potentially make.
I would say a 19% efficiency is lowballing it? Can probably do almost double?
40% range is doable but that would be near the current world record (44.7%) and these are extremely expensive. They're not used for residential or commercial applications. These are in the concentrator triple-junction category of cells and are used in space applications (think NASA).
Most residential solar panels (without concentrators) are in the 20% range.
-
Southern California Edison rates:
31c per kWh for Tier 4
On a tiered plan, you typically will wind up offsetting the 31 cents first. Once the Solar Panels generate enough electricity to knock you down to the next Tier of usage, you are paying 27c.
So basically, Solar City can easily beat those rates and still earn a good rate.
Oh yeah, there's no doubt it makes sense in some scenarios. Keep in mind though you're talking about the highest tier in the state which has the 6th highest average rate of electricity in the country (Source: http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a ). The average rate for CA is around 17 cents. I'm in Los Angeles and our highest tier during the most expensive season is 21.5 cents. Even so, I was doing some back of the envelope calculations for a household in my area and installing solar would yield mid-teen returns (after federal and state incentives). I was just pointing out to yadayada that in his back of the envelope calculation for the power consumption of the entire United States, using 37 cents per kWh isn't appropriate.
I'm wondering if one were to sign a Power Purchase Agreement with Solar City, what kind of rates they would charge. Hypothetically, if someone was with Southern California Edison (Tier 1 - 13 cents, Tier 2 - 16 cents, Tier 3 - 27 cents, Tier 4 - 31 cents), and Solar City quoted a PPA for 20 cents a kWh, you would only get a system big enough to get you down to Tier 2 and no more. Has anyone received a quote?
From their annual report I see that cost of installation is about $3/Watt so a 1KW system would cost them roughly $3000. This should generate between 1400-2000 kWh in California (more in SoCal, less in NorCal). Say 1700 kWh on average. If they sell this to the customer at 17 cents a kWh (average for CA), they get revenue of about $290/year. Federal and State incentives would bring the cost down (I have no idea what kind of incentives they receive) and maintenance would eat into some of that. Anyway, the stock looks absurdly overpriced but I'm off to do more reading since the industry is interesting and I'm realizing I don't know enough to even ballpark what they/any other company in the industry could potentially make.
-
If we do some math, it looks like they will be basicly a utility like company right? Except now the source is not some central place with a grid to homes, but will be on the homes it self.
The US consumes about 3.8 trillion kwh in electricity. this costs about 37 cents per kwh on average.
So that is 1.4 trillion usd.
source for this is here:
http://www.indexmundi.com/g/g.aspx?c=us&v=81
So if Solarcity captures 10% of that, that would be 140 billion$ in annual revenue.
Apparantly Musk bets that more energy will come from solar then from anything else within 20 years. Wouldn't that be a bet that Solar city would basicly be a company with at least 10's of billions in revenue then?
With only a 3% profit margin, that will be 4.2 billion in income. Kind of very rough, but I guess if you think long term and believe the whole solar thing then a 6 billion valuation is not so crazy.
Did I make a big mistake anywhere here? If we assume that solar will be the future and solar city can take nice market share here.
37 cents/kWh? The national average is closer to 12 cents/kwh. I think only Hawaii and Alaska are anywhere near 37.
Edit: Alaska is around 20 cents/kwh .
-
On a regular basis, zero. Got rid of it 5 years ago because I noticed the cable bill was approaching $100 a month. I do still watch the major Football tournaments when those are on (World Cup, Euro, last few games of the Champions League, etc.).
-
Am I the only one that finds it comical that all these threads (average annual return, YTD return) pop-up when there has been a big run-up? Where were these threads towards the end of 2011? ::)
You mean the one that we did have last year (October I think) where I posted -25% and UCCMAL posted -35%.
Oh yeah, that thread ;)
You're probably right, I generally ignore those threads but lately it feels like an online penis measuring contest is about to break out.
-
Am I the only one that finds it comical that all these threads (average annual return, YTD return) pop-up when there has been a big run-up? Where were these threads towards the end of 2011? ::)
-
I'm curious — Where do you find local mom and pop businesses for sale?
In California - www.bizben.com
You'll have to wade through a lot of garbage but every once in a while something interesting will pop up.
-
Well, the biggest problem is it's in Russia and a large part of the cleptocracy that currently rules there. Nearly everyone in the top 10-15% of the company is, or can be directly traced to, a crony of Putin. I could probably write a small book on some of the ways that they have screwed minority shareholders previously and that would all just be stuff that's out there in the open. Here's an article from the New Yorker that lightly touches on some of the issues:
http://www.newyorker.com/reporting/2011/04/04/110404fa_fact_ioffe
Browder's experience there is also good reading to see how people not connected to Putin (or those he is not happy with) are treated in business and the courts.
-
There's an enormous difference between owning a restaurant chain and the franchisor of a restaurant chain. Franchising can be, and often is, a wonderful business.
From Imvescors prospectus for the rights offering, 249 out of 253 restaurants are franchises. For Prime that number is 143 out of 154.
-
The one time I lent out securities, the brokerage provided a letter of credit for the full value of the securities +25%. I was receiving something around 12% per year, on a monthly basis. The broker was lending it out at around 25%. Unfortunately, this didn't last long because the shorts covered roughly 4 months after I started lending and the broker was no longer interested in borrowing my stock.
-
Lol...when I heard the LVLT question, I leaned over to my friend and jokingly said "I bet that's ValueCarl." It actually was. Wow.
-
Here's an example. Let's say you and I enter a Total Return Swap on a stock that's at $100. I agree to buy $100 notional amount from you and you will charge me 5% for the privilege. At the end of year one, the stock is at $145 and has paid dividends of $5. Assuming it settles yearly, at the end of that year I make a payment to you for $5 (5% interest on $100) and you make a payment to me of $50 (capital gain of $45 and dividend of $5).
If, on the other hand, at the end of year one the stock is at $75 and has paid dividends of $5 it would look like this:
I will make a payment to you of $30 ($5 of interest on the $100 notional and $25 of capital losses) and you will pay me $5 (the dividend).
In reality, they usually just net out. So in the second example, I would simply pay you $25.
-
Barminov, Grenville,
Can you explain the mechanics of what they have done with these holdings in terms of the derivative transactions and why they no longer show up on FFHs 13f? A.
Al,
I'll give it a shot. There are two parties to a Total Return Swap, let's say Deutsche Bank and Fairfax. One party makes payments based on the agreed upon interest rate (either fixed or variable, usually variable). The other party makes payments based upon the total return of the underlying asset (dividends and capital gains). In this case the underlying asset is KFT, WFC and USB.
So, FFH bought $240m notional of swaps on WFC from Deutsche. They will pay Deutsche the agreed upon interest rate on $240m. Deutsche will pay FFH the total return on WFC. In the event that WFC goes down, FFH pays Deutsche the decrease. Effectively, FFH is long WFC and has the same economic interest as if they owned the stock on the upside and downside. The beauty of it is that they don't actually have to put up the cash to buy it. They just pay the agreed upon interest rate on the notional amount.
They no longer show up on the 13-F because FFH doesn't actually own those shares, just the economic interest.
These swaps are big favorites of the hedge fund community because it's a cheap form of leverage and you could get around public reporting requirements to an extent...you could read up on The Children's Investment Fund v CSX for more info.
Have We Hit The Top?
in General Discussion
Posted
Central. Born and raised in Kyiv, but I have relatives from Chernihiv to Cherkasy, pretty much all over that North Central region.