ShahKhezri

Moved from San Antonio to San Francisco last month. If anyone wants to meet, seem like a handful of people are in the bay area.

40% of my portfolio in FFH, avg $230 ($200 dividend adjusted). No plans to sell. It was at 110% of my portfolio in 2007-08. I don't plan on increasing my position in FFH, portfolio is currently very overweight insurance with FFH at 40%, MKL 10%, Y 5%, and contemplating a 10% position in L. The idea behind the overweight insurance is two fold: 1) I started my career in insurance and have a lot of friends that echo the 5-10% rate increases, and 2) I don't see the JNJ, PG and other 3% yielders attractive to my investment strategy but float generating businesses with locked up capital will benefit immensely 10 years down the road by investing there. Also, having MKL, Y and L at a combined 25% vs. FFH at 40% is a barbell strategy of inflation vs. deflation. That's how I look at it, the quarterly numbers are just noise to me.

I own FFH, MKL and Y. Only Y trades below book currently and should continue to do well.

I'm fine with the RIMM position in FFH, it represents a small % of total investments. In a way, I need FFH to take these kind of positions because I couldn't/wouldn't. Same thing goes with the muni's, CDS, deflation bet, etc. I don't think you can have one without the other.

Are you looking at CHK, ECA? Personally, I'm selling some 25 to 50% positions that ran up to purchase a full position in CHK and hopefully MA if it comes 5-10% lower.

Anybody have a view on this? "The retailer’s creditworthiness matters to its pension plan beneficiaries because last year, in an unusual move, the Sears pension fund bought $250m of Sears debt." http://www.ft.com/intl/cms/s/0/ba9c98a0-3700-11e1-96bf-00144feabdc0.html#axzz1ib9qtEPZ So just from a pure accounting perspective, it's not a repurchase so he's not recording a "gain" but he thinks they are good enough to buy it for the pension fund. I guess that's one way to hit the 8% target for the pension fund, or whatever their mid-single digit target is. What if he's waiting for the next round of retail bankruptcies to use pension assets to purchase distressed bonds and gain control. He really is an intresting figure and so mysterious.

If anything, this just makes me think that EL is going "all in" SHLD. Probably not a bad thing if you think the guy still have above average IQ.

Up 10%. What worked: Shorts: NFLX, CRM (shorted it 3x), LULU, FOSL, VXX, MGM, WGO, BC, RST. Longs: Started the year heavily in FFH (which I look at as cash) and bought a very meaningful position in MKL at $355, Visa at $71, VRSK, VRX. In November, initiated a 5% position in MBI-February $10 calls after reading the 3Q11 CC and hearing Jay Brown pretty much hint at big announcements. Selling Puts: Sold a lot of puts on Dell at $14, MBI at $7, Visa at $70, $72.50 and recently with RIMM at $12. Getting Lucky: About 20% of the portfolio was in WMT and MSFT, with covered calls at $55 and $25, respectively. In July, I was called out and with an unexpected August drop in the markets, it worked out. This year, I sold puts on SHLD 3x, at $75 (collected $3, bought back at $0.78), at $67.5 (collected $1.35, expired), and at $60 (collected $2.20, bought back at $.55). Backed off from selling puts on SHLD in July as I feared that he would be less likely to repurchase shares given the fixed charge coverage limitations. I definitely got lucky with this one. But I'm back to selling puts on SHLD starting last Wed. What didn't work: Long: a 20% position in BAC at $8.50, resulted in 10% damage to the portfolio. I don't think I made a lot of mistakes with understanding the situation, because I know BAC was hit twice for reasons that I could never foresee: 1. The $5 fee PR fiasco. 2. Systems outage. Shorts: I was short some REIT's PSA/SPG/VNO. The trade worked successfully, closed it. Euro bailout, they rally, re-short and didn't work. The dividend headwind also limits upside. Still think most REIT's are WAY overvalued, but in a 0% interest world, people have to chase yields somewhere. Shorted CMG $320, that didn't work. Over trading: Bought GOOG at $495, sold it two weeks later at $522. I sold because I only purchase 1/8 of what I wanted. Bought MA at $305, sold it at $315, same story as GOOG and not being able to build a full position. Selling Puts: Wanted to own AAP, got cute with it and sold puts instead at $55, next thing I know the stock was at $63. All in all, probably looking at 150% turnover in 2011, going to be A LOT less in 2012 as my core holdings in FFH, V, MKL, VRSK, VRX, Y are about 85% of the portfolio and I plan to hold them for a very long time, RBA/CHK/MBI/LVS/ARCO the rest. I will sell 1/5th of my remaining FFH position post dividend as my industry exposure to insurance with the addition of MKL/Y and less so with VRSK is high. I have a lot of friends that still work in the insurance industry and I don't think I have any other group of friends that are as excited/optimistic.

Faith in his mentor Rubin?

Selling BAC options and half of my equity position to cover MBIA gains. I can star selling Dec 26.

I've invested in FFH, MKL and currently accumulating Y. In addition, I also own VRSK which should beneftit greatly from a hard market. They have one of the more visible moats out there.

"The Best Opportunities in Half-Century" http://online.barrons.com/article/SB50001424052748703922804577066323160174632.html?mod=BOL_funds_recent#articleTabs_panel_article%3D1

Woolworth's has a great offering in S.Africa.

I work in the commercial banking division of bank admired my most here and Berkshire. Located in a top-10 city, BAC has great market share. They agent most of the deals, and with most deals involving term debt and a plain-vanilla LOC, the profitability is driven by treasury management (it's a very sticky part of the business). When I hear about how the banking sector doesn't have a moat, I disagree. The regionals don't have the TM reach some of the big banks have. I think BAC will continue to do well going forward, Lewis as we know made a lot of dumb mistakes, reversing those mistakes has taken 2 years (going on 3). Much of the talk here is based on valuation, but BAC (the business) still has a great franchise. Non-core asset divestiture is almost complete, looking forward to Archstone announcement soon. The legacy 05-07 "bad" assets are almost complete (therefore reserve releases will be a boost). I think some announcements are in the works re: dividend, repurchase, SIFI surcharge, legal resolution. Also thought this article was refreshing: http://www.startribune.com/business/133709738.html

Uccmal, I have invested in BAC 2013 calls as well and planning to sell these and buy the 2014 options. I am assuming this would trigger the wash sale rule. Is there such a things as "rolling over" into 2014 options or some other way to avoid the wash sale rule in this case? Thanks Vinod I have the same question, if I sell the equity and buy the warrants, is that considered a wash sale? On the options, I believe the answer is yes, it would be considered a wash sale. Rules are kind of muddy on the options side though.

Listened to his CC, thought his remarks on Bank of Ireland were interesting, pretty much the ONLY thing he was bullish on.

ShahKhezri, I have thought the exact same thing and have said as much in private. Almost considered applying to the VIC with ORI, but I couldn't bear to actually write the damn thing up. Not sure I'm too interested in applying for the VIC anyway. Just seems like a great fit under the FFH umbrella, cut the dividend (+7%), reinvest the portfolio (very sizable), long-term operators going through a tough period (like Zenith). Might be too big, but Zenith was +1B, this would be 2.5-3x.

Is ORI too big of an acquisition for Fairfax?

SD DWA VRX

Yup, the comparisons to 1994 are supported empiricaly as well: "The loans to low-cost deposits ratio dropped below 90% in August 2011 for the first time since January 1994 to 89.9% for the 25 largest U.S. banks, as compared to 100.9% at the end of 2010. The loan/deposit ratio increased slightly to 90.9% on August 24."

I think the best thing to do is decision tree and place probabilities on the outcome. Really, raising capital through new issuance happens if the settlement is 1.5-2x more than they have reserved. Right now, you're hearing $50Bn from Jeffries (the analyst who made that statement is from the derivative desk btw), and $100-200Bn from Blodget (who can't work in the securities industry). The argument that the CDS market may force them to raise capital is ludicrous. So the implied volatility on their debt goes up and they have to raise capital. If that's your theory, short it. If your conclusion is that they will raise capital through sell of assets (which they have a lot of) and earnings retention...well then... Lehman and '08 casualties went out because although they had assets, there wasn't any liquidity (forced sellers and unwilling buyers). Take for example, Archstone, it's a solid asset, Lehman has a 47% stake, BAC has a 28%, and Barclays 25%. In '08, there wasn't a way to liquidate an asset such as this. Now there are talks of an IPO. (another + to liquidity). Last weeks deal to sell card assets to TD. Potential sell of Irish and UK card assets (which I think would be smart for FFH's new investment to buy if the price is right), another source of liquidity. These kind of transactions weren't happening in 08. The only transaction that did happen other than forced purchases (wamu, Bear, Merill, etc) was Visa (treasure). BAC sold Blackrock and raised $2.5Bn in May at $188 ($30 higher than now)...and you know what another Jeffries analyst said: “This is cash coming in, which is a positive event, as opposed to all the other remaining tasks” Moynihan has related to resolving mortgage liabilities, said Jonathan Hatcher, a credit strategist at Jefferies & Co. in New York. “It’s nice to get $2.5 billion, but that’s probably a drop in the bucket relative to everything else they have going on.” How do you go from "drop in the bucket" to "they may have to raise $50Bn"???? Merill's in talks to sell their real estate assets to Blackstone.... There are a lot of naysayers out there and that's fine, you have to treat the position for what it is. But, I think the resolution is quicker than what the market thinks... Q3-Q4: Gary Lynch joins the Company from his "garden leave", settles the mortgage crap, either they raise capital (equity) or they don't (my guess is CCB, Archstone, Irish/UK card, additional sell of non-core assets and reserves will suffice), in which case the biggest cloud has passed, Treasury ok's the dividend/sharebuybacks...it's going to happen fast. Good luck to all.

Without any knowledge of Autonomy or the $10Bn price/valuation/etc., I remember a thread here debating why Blockbuster should have paid any price for Netflix to be relevant. If HP doesn't do this transaction, maybe they feel they won't be here 10 years from now. I don't agree with that logic and I think Hurd did a truly horrid job.

Initiated a position on PAYX, GOOG and LUK.

I've been buying the BAC common the last two days, warrants havent really traded as pressured as the common the past two days, which is surprising.

Hey we bought both today! Both are really cheap and completely undervalued. Cheers! And...WFC downgrades BAC this morning. It was a revised GDP downgrade.