oldye

Sounds like a jockey bet, lots of opportunity to put capital to work purchasing media assets.

Maybe Dengyu, and the rest of you should hang out with more engineers, I promise that you won't have such a bleak outlook. I don't think the outlook has ever been any different than it is now, in fact I'm damn sure that the standard of living for the world will increase at a higher rate than it did in the 20th century. As long as we have a system that adequately rewards the top 10% of the population the rest of us can just tag along. We really only needed 1 Einstein and Edison.

Its all relative, to you or I having 20 billion in cash is plenty of firepower. Berkshire needs to keep holding cash, I'm pretty sure if another Constellation type deal popped up he'd be comfortable bringing it down to 15, maybe even 10 billion. Millions of lives depend on Buffett's allocating skills.

Its simply a function of whether or not they can keep investing capital at 15+%, without knowing the future its impossible to tell if that will happen. Heck if the shares stay this cheap for the next 10 years, they'd have no problem earning 25% a year.

Its that esoteric concept of intrinsic value again, annoying how it doesn't necessary have anything to do with book value or the share price of other companies? Berkshire simply won't grow as fast as Fairfax in the future, you're paying more because Berkshire has a much stronger moat around its earnings power. As Fairfax continues to establish and grow its moat, shareholders will eventually start to demand more than book.

The cad bonds do not look bad considering the recent run up, they've done much better than U.S treasuries in terms of absolute buying power! Both companies are in the enviable position of being able to put excess capital to work buying back shares, all other capital decisions are weighed against the option which results in very shrewd allocation. The lower the share price, the higher the opportunity cost, which equals improving earning power per share.

sometimes they become available during the summer

The cashflow is horrible because they haven't been able to clear their inventory, based on the disclosure I don't see any other covenant other than maintaining 10 million dollars in cash in case they want to pay dividends. If they could sell just 40% of their inventory, they'd get roughly 45-50 million in cash. I wish I never got involved in this one but I can't get myself to unload the common at these prices. Looks like someone sold over 2 million units at 25 cents on friday, also means someone bought 500k worth of the stock. http://wood.lesprom.com/news/38712/ some good news, pulp inventories world wide are actually balanced...maybe we'll be pleasantly surprised after q2!

Thanks for the Kudos Ben, but I can't take credit for it since my thought and reasoning were incorrect and b) I never placed the trade. The yield curve inverts whenever there is a lot of money betting on recession/depression, just like in 1998 with Ltcm, some large country could have defaulted on its debt and caused the yield curve to invert, can only be sure something crazy doesn't happen with hindsight. I'm sure one could set up a trade where there wouldn't be much at risk if things went wrong but the gains would also been pretty limited.

http://www.latimes.com/news/local/la-me-teachers6-2009may06,0,3038809.story I wish this was made up!

"It's pretty clear that the Fed has no control over interest rates. I really don't have any idea what happens next, but if rates do keep spiking, the worry does become deflation rather than inflation." Looks to me like the fed has a pretty tight lid on short term rates... you are right that high rates have a deflationary impact on the economy but if we do have deflation you end up with very low treasury rates like we had late last year. The treasury markets are reacting to North Korea redeclaring war, military conflicts are very expensive.

There are teachers in the lausd, deemed unfit to be around children, that show up everyday to some building where they sit around all day doing god knows what and earn a real paycheck. At the same time young, dedicated teachers in the same system have to worry about losing their jobs due to the budget crisis. Any union that promotes the interest of child molestors vs. members of the same union needs to be abolished. I hope charter schools keep performing as well as they have, I think that they're one bright light in a big pile of turds.

http://nbbusinessjournal.canadaeast.com/journal/article/676338 "Justice Daniele Mayrand said that while the termination of the contract may force negotiations, there is nothing illegal in such an effort. "SFK's situation isn't gleaming, but it is more robust than Abitibi's," she wrote in her ruling, noting that SFK has twice suspended its St-Felicien operations since December. But she disagreed with SFK's assertion that Abitibi's $12.2-million annual loss from the contract represented "a drop in the bucket" for the large company." ??? ??? ??? Is breaking a contract is not illegal in Canada? or is it somehow contingent on whether you keep your mills open when your order book is completely out of wack? Its hidden somewhere in the MD&A but they now have over 120 million dollars worth of unsold inventory sitting around...my guess is that they're down to something like 10 million in cash and they've already borrowed 20 million dollars so far this year from their credit lines just to keep operations going. That 12.2 million dollar loss is obviously a gain for SFK, can someone please explain to me why the financial condition of either company has anything to do with contract law?

They could spend 40,000$ per child and still not get any kind of results in California, 8th largest economy in the world ranked as the 2nd worst school system in the country. Keep giving all those tenured twits at the LAUSD more money.

http://www.vancouversun.com/business/Canada+fights+back+over+black+liquor+pulp+paper+industry/1617370/story.html "The American Forest & paper Association, which supports the tax, claims it is not a subsidy but a legitimate rebate to compensate companies that are creating alternative fuels."

Too bad theres no Chapter 11 for states...that only leaves currency debasement which is why Warren is so damn sure we'll see inflation. A AAA rating in the corporate market used to stand for a .02% chance of default, how can the odds of a U.S default on U.S denominated debt be anything other than 0?

You know I just assumed they did some California quake cover, would have been nice business over the last 15 years.

A 100 billion insurable event Buffett estimated would cost them 3-4 billion dollars. Fairfax would probably be in the 600-800m range if we go by 15-20% max exposure to any individual event from the ORH conference calls. Only about 12% of Californians have earthquake insurance, A 100 billion dollars worth of insurable residential damage would roughly equal 832 billion overall residential damage. Hope that helps.

That would mean the Fairfax compounding machine would need to generate about 10-15 billion dollars a year in earnings, about 600$/share every year...hey remember that million shares they bought back in 2008 well that would be effectively accruing about 600 million a year to shareholders!

Gave Dear. Mr. Buffett a try before putting it down halfway through to finish Snowball. Its a bit technical but if you're interested in learning more about derivatives its a good read, will probably pick it back up sometime soon. Snowball was the most disappointing book, 800 pages of Schroeder cheap pop psycho analysis, lengthy prose and overall unnecessary writing that demonstrated that she doesn't understand Warren's investments or his approach.

Cash reserves dropped to 23m not cash. If cash were up to 23 million dollars I'd be relatively relieved! The Canadian government has been planning some type of package, most likely in the form of loan guarantees and if we're lucky a match on the black liquor tax. At 20$ a ton discount to market, assuming about 300k tones a year would be worth roughly 6 million a year till 2022, 78 million dollars! A settlement for the NPV of the contract would bring temporary relief, perhaps enough to carry them through this crisis.

Just for the record, I think you guys are right and they probably reduced their position, JNJ is very attractive at these price levels. But if they didn't they'll probably end up with satisfactory results. At the AGM, Prem said that they wouldn't hesitate to lighten up if a position quickly doubled.

I think 2012 is just about right, but at some point you slap a 18x P/E on it and you have a 52$ stock, just a rough guess but should be an adequate return.

Assuming 4$ a share in normalized earnings, FFH's lookthru earnings on the Wells position alone 80 million! Why sell 80 million dollars in earnings for a mere 500 million when they can afford to wait? It would take roughly 2 billion dollars worth of treasuries to generate the same amount of earnings power, even more if you consider taxes!

pgr is gone after only 1 quarter :o My estimate is that the Stock portfolio MTM as of today is up roughly 500 million assuming no changes since 3/31/09