oldye

It is about 60 degrees here right now in Southern California, should be a high of 71 tomorrow ;D

Kmart is the type of place you shop at when you first immigrate to the U.S, have no money and don't know better. A few years back, WSJ or some other newspaper did an study that came back with Kmart charging 20%+ more than other stores for similar items, so no its not cheap. Kmart has a virtual monopoly in Goleta, CA even then its mildly successful. Has Eddie found a full time Ceo yet?

People don't give Warren enough credit, picking the right successor is the most important decision of his career, he's not going to let the company go to someone that won't preserve the culture. I can't remember the exact quote but I think Warren has instructed Gates to sell all the shares within a predetermined period after Warren's death (10 years?). By then Berkshire will likely be a 600+ billion dollar behemoth, I believe Warren talked about this 2-3 years ago at one of the annual meetings...he even said that he has a good idea when (not if) Berkshire will become a trillion dollar company. The odds of any fund being large enough to do damage to the culture are remote. Cheers!

That would be very stupid all things considered. Warren Buffett is the best capital allocator in the world, if you want a dividend sell 5 % of your shares. Enjoy Berkshire trading at a discount, it won't last forever and it has nothing to do with Gates selling shares.

Mammoth museum! Looks like they put another 110k into it in 2008. http://www.youtube.com/watch?v=A1tbsXU7NFE&feature=related

Are you talking about the nearly half million dollars in the ceo's museum? I don't have any interest in this company but remember that was a little out of place when I looked over them 4-5 years ago.

http://www.khanacademy.org/ Free quality lectures on everything. http://academicearth.org/subjects/ Free lectures from Yale, Harvard, Standford, UCLA and more. These are a few great sites I've stumbled across, the internet keeps knocking down barriers and freeing information!

No you're right, I was in jr. high school when it was at 600 Canadian. If there are shareholders out there that bought at the peak and held their shares without averaging down than there are plenty of fund managers on this board that would gladly make their capital allocation decisions for a reasonable fee. Most of them don't even have their ex wives suing them for hundreds of millions of dollars and publicly accusing them of insider trading.

Sounds like you missed the time Fairfax \sold their common position at around 5-6$ a share and made a small fortune. Now granted Lvlt has a very high cost of capital, the good thing is that a good chunk of that is paid to Fairfax on their 100 million 15% convertible bonds. Now you might think the position is too big but thats an opinion, they have plenty of liquidity to pay claims and won't need to sell unless the situation fundamentally changes. Thanks for sharing your opinion.

Internet access will triple world wide in less than a decade and current users will continue to use more and more bandwidth. There will certainly be opportunity for Lvlt to capitalize on all this additional traffic...no clue if they'll be successful but it certainly fits the Fairfax model for investing, they only need to be right 2 out of 3 times to make money.

So the fear is that the people currently holding those treasuries won't reinvest? ::)

http://www.kelowna.com/2009/12/18/when-an-annual-report-speaks-volumes/

http://www.newswire.ca/en/releases/archive/December2009/18/c4614.html 9.5 megawatts is enough to power about 6000 homes! "The average price for the purchase of the biomass power will be 11.2 cents per kilowatthour, including transmission costs, the utility said. The power must be available by late 2012."

Thanks for the update, Rep. Kirkpatrick seems to be all over this! Go congresswoman!

So far management has done a great job managing the crisis, I'm pretty sure they're making boatloads of money at these prices at their Canadian plant. The U.S plants have been hurt badly by the liquor subsidy, and I've read a few articles that the IRS may effectively double the subsidy for next year...potentially upping the subsidy from 200 to 400$ per ton. Nothing they can do if the U.S government is trying to destroy demand for RBK. They also won't be making any distributions in the first half of '10 due to the covenant violation last summer.

Berkshire has a special meeting set up in January to vote on the issue so sometime 1st Quarter the deal will close. I hope they take Berkshire stock instead of the cash.

They lost 2.2 billion last year just from writing insurance and looks like they took some heavy losses on their equity portfolio. Wouldn't be surprised if they were like many deer in the headlights insurance co's that sold out of "risky assets" and went heavy into short term bonds before the run up.

Only thing I would change is that Interest and dividend income will be north of 200 million per quarter going forward due to the acquisitions, putting money to work etc. CR could be a little better than 100 during Q4, but going forward without a hard market I'd be extremely happy if they are anywhere close to 100.

I think Patrick is hinting he might start looking for a replacement

Taxable treatment of Tips: Semiannual interest payments and inflation adjustments that increase the principal are subject to federal tax in the year that they occur, but are exempt from state and local income taxes. So unless your marginal tax rate is 0 or you hold all your assets in a Roth you still don't keep up with inflation.

GAAP encourages fair value accounting when a marketable price is readily available. Sounds like it would fit in with 1) asset under FASB 157 accounting (came out after I finished school so I might be wrong). With USG they simply converted right away at a higher price than market...they might do the same thing here..they might not but for all practical purposes 200m they got 18 million shares of SD and a 60 million 5 year annuity. SD also sold 24 million shares at 8.85 a share so if Fairfax wanted to buy 18.4 million they would of paid 163 million dollars. Thus effectively they paid 37 million dollars for 60 million dollars in cashflows over 5 years.

Actually since these things are pretty much the common @10.85 a share + 60 million in dividends over 5 years so they will fluctuate in value w/ the the stock...but this represents just 10$/ a share so I'm sure they can live with the volatility :). Sd isn't hedged past 2010, they're betting prices will go up but the problem is that if we shut down 100% of the U.S production, We'd have enough to last more than a year. Now add companies like this that have plans to ramp up production in 2010, I think that they'll likely push prices down further! I hope there is a lot of money being put into new NGL plants...Luk was way ahead of the curve on this!

Yea the situation is that the people with the capital need an incentive to invest. In the 50's the gov paid nothing on bonds and we had 5-6% inflation..this puts a lot of capital into companies that earn good returns on capital where it freaking should be!

They raised capital at 8.88 a share or something like that. Fairfax effectively gets the same stock 5 years late at a net cost of 8 or less. SD is using the proceeds to buy an 800 million dollar field next to their existing projects.

I like the deal from Fairfax's point of view...it also makes SD less risky/rewarding...they'll actually have Equity again! Cashflow from the new fields should be around 40-60 mil w/ upside. Not sure I would do this type of deal if I was 6 months away from a homerun 50% increase in production...management must feel apprehensive. From the sound of it everyone is going to be ramping up production...where all this nat gas will go...the salt mines are already packed! If gas prices are 6+ by 2012-2013, this company should generate about 1 billion dollars a year..7% will belong to Fairfax...on a net investment of about 155 million. I think their stock portfolio as a whole has a good chance of doubling over the next 5 years x a good hard market sometime in the next 5 and we'll be happy w/ the results