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Grenville

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Posts posted by Grenville

    John Chen's simple plan to save BlackBerry

    in Fairfax Financial

    Posted

    http://www.sec.gov/Archives/edgar/data/915191/000110465914013634/a14-6855_1sc13da.htm

     

    Does this mean Fairfax is selling Blackberry? What re-balancing does this document refers to?

     

    Great to see them pulling some of their capital out!

        Between January 29, 2014 and February 24, 2014, Northbridge Commercial Insurance Corporation sold 250,000 Shares on the open market at an average price of $10.03 per share, Northbridge General Insurance Corporation sold 1,250,000 Shares on the open market at an average price of $10.03 per share, United States Fire Insurance Company sold 500,000 Shares on the open market at an average price of $10.03 per share, Advent Underwriting Limited sold 700,000 Shares on the open market at an average price of $10.03 per share, Odyssey Reinsurance Company sold 1,500,000 Shares on the open market at an average price of $10.03 per share, TIG Insurance Company sold 500,000 Shares on the open market at an average price of $10.03 per share and Zenith Insurance Company sold 500,000 Shares on the open market at an average price of $10.03 per share.”

    Getting started... where to begin?

    in General Discussion

    Posted

    I would vote against trying to time the market with an index fund especially if you're going to want to invest in individual companies in six months.

     

    I would say read the Berkshire letters. Pick some companies and try to value them. Once you find stuff you feel comfortable with valuing, look to find stuff with a margin of safety.

     

    If you feel comfortable enough start investing a small portion of your capital based on your analysis. As you get more comfortable with your analysis and the results, put more capital at risk. Put the lessons of the Intelligent Investor to work.

     

    The other thing that was important for me was to read the 10Ks cover to cover. It's hard at first, but you'll be surprised how much better you get over time.

    2013 results are out

    in Fairfax Financial

    Posted

    I'm probably just restating what has already been said, but this line in the recent conference call emphasized the downside of the equity hedging strategy at FFH.

     

    The realize loss of $1.4 billion on our equity hedges was due to the sale of common stocks and consequently a permanent reduction in our hedges.

     

    Mark to market fluctuations are hurting Fairfax. When they realize their investment gains, they are permanently decreasing their notional hedge. Thus there is no further opportunity to gain the loss on the hedge back. It's realized.

     

    If the market drops back to the start of the year, the hedge losses aren't reversed.

     

    I guess Fairfax could re-buy the long position they sold, but then they would just reinstate the hedge on it. A longer sort of bet like a long term put similar to their CDS or CPI bet would give them an opportunity to earn that loss back since they still have the notional exposure. Instead here they get no real benefit to picking stocks especially if the hedge doesn't match their bets. (sort of related to Packer's beta analogy)

     

    Another worry would be if the markets continue up or even sideways, investors don't really get any benefit from Fairfax's investment ability on the equities. If markets continue up, Fairfax will continue to realize their equity gains and close out the hedge to a point where there is no equity positions and no notional hedge.

    Facebook buys whatsapp for $16B

    in General Discussion

    Posted

    In the event of termination of the Merger Agreement under certain circumstances principally related to a failure to obtain required regulatory approvals, the Merger Agreement provides for Facebook to pay WhatsApp a fee of $1 billion in cash and to issue to WhatsApp a number of shares of Facebook's Class A common stock equal to $1 billion based on the average closing price of the ten trading days preceding such termination date.

    Facebook buys whatsapp for $16B

    in General Discussion

    Posted

     

    Not saying whatsapp is worth $16B though.  But then, is FB worth $170B?  Could just be one overvalued piece of paper exchanging for another similarly overvalued piece.

     

    This. There will eventually come a time when FB's valuation will no longer allow them this luxury, but for now, they might as well keep snapping up valuable tech companies using their overpriced pieces of paper.

     

    Thinking about it more, I agree. He's using stock to buy another base of users. It makes sense if you value the company based on users. A majority of FB's cash is from their stock sales.

    Facebook buys whatsapp for $16B

    in General Discussion

    Posted

    Facebook is trading users valued at $170 for users valued at $40. This is a good deal as long as it's with Facebook's highly overvalued stock. I think Zuckerberg is a smart capital allocator and knows FB's primary income stream is built on a house of cards -- if he can trade a piece of this for growing, disruptive companies it's a great deal for FB.

     

    He's using 4bln in cash. Don't know how much of that they raised at their IPO, but the whatsapp folks are smart for getting a good chunk as cash.

    A new message board?

    in General Discussion

    Posted

     

    And to those that continue to show support for the board and aren't bitching, I thank you from the bottom of my heart!  Paul will be inserting a mobile add-on that should give some mobile functionality in the next couple of weeks.  The "search" feature is something we'll have to work on and tweak over time.  Cheers! 

     

     

    I wouldn't be investing full-time, if it wasn't for this board and the people I've met through it. I appreciate the time and energy you've put into putting a board like this together. It's been an incredible resource. It's hard to find a place to find balanced, educated views on companies and other subjects.

    2013 results are out

    in Fairfax Financial

    Posted

    They changed how they do things.  Back in the 2007 version, they had out-of-the-money index calls to hedge against the possibility of the markets shooting up.

     

    I didn't realize (don't remember reading about it/started investing in FFH in 08/09) they had out of the money index calls to hedge on the upside in 2007! I'm surprised they didn't do the same here, it's cheap insurance just like the CPI derivatives.

    BNSF and MidAmerican

    in Berkshire Hathaway

    Posted

    BNSF Announces $5 Billion Capital Commitment Program

    http://www.bnsf.com/media/news-releases/2014/february/2014-02-04a.html

     

    BNSF Announces $5 Billion Capital Commitment Program

     

    FORT WORTH, TEXAS, Feb. 4, 2014:

     

    BNSF Railway Company (BNSF) today announced a new single-year record capital commitment plan of approximately $5 billion for 2014, approximately a $1 billion increase over its 2013 capital spend.

     

    The largest component of the capital plan is spending $2.3 billion on BNSF’s core network and related assets. BNSF also plans to spend approximately $1.6 billion on locomotive, freight car and other equipment acquisitions. In addition, the program includes about $200 million for continued installation of positive train control (PTC) and approximately $900 million for terminal, line and intermodal expansion and efficiency projects.

     

    BNSF handled more than 50 percent of the volume increases for the rail industry in 2013. The growth was led by an 8 percent increase in domestic intermodal units, an 11 percent increase in Industrial Products volumes led by crude-by-rail related traffic, a 3 percent increase in coal volumes and a fourth quarter surge in agricultural products. This growth is on top of a 2012 BNSF total volume base of more than 9.6 million units. Much of the capacity expansion in the 2014 capital plan is for infrastructure investment on BNSF’s Northern Corridor to put the company in position to meet all customer service expectations, including Amtrak.

     

    BNSF’s expansion and efficiency projects will be primarily focused on line capacity improvements to accommodate growth in agricultural products, intermodal, automotive, and industrial products volumes related to crude oil production, and other terminal improvements to enhance productivity and velocity. More than $900 million of the capital plan is for expansion and maintenance in the Northern Corridor.

     

    "Our capital plan continues to focus on improving our ability to meet our customers’ service expectations, increasing our capacity where there is growth, and strengthening our railroad to help ensure it remains the safest means of ground transportation for freight," said Carl Ice, president and chief executive officer of BNSF Railway. "BNSF’s capital investments are an integral part of making sure our network is well prepared for the demand for freight rail service in the U.S. and helps ensure the continued integrity and reliability of our network."

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