Rabbitisrich
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Posts posted by Rabbitisrich
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This might put worker's compensation insurers in play, especially given the fairly low valuations of the group. I own a bit of EIG, and there has been a steady rise since last week.
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That article was actually crap. It never fails to amaze me how many people will warn of a funding crisis, when all the evidence you need is that there's currently an excess of money that would rather be in government bonds than invested. Krugman posted a chart some time ago showing how federal government essentially stepped up and borrowed the difference between savings and private investment. When people have the courage to move away from government bonds to making actual investments, yields will rise. . . but so will business activity, taxes, etc.
If you're not going to read the economic literature, at least take some time to get comfortable with what should be the cognitive dissonance from this idea. When I see people like Niall Ferguson, i wish i had a program that let me check off and do away with ever having to see an article from him again. His reputation to me is shot (its actually been made worthless to me several times before), and I never want to support any of his words by one of my clicks. . .
I agree. I think he's great too. You aren't going to get deeply nuanced, careful analysis from his books, but you will get an expansive overview from an author with a strong Hobbesian perspective. I wasn't a huge fan of books such as the Cash Nexus, where he ignores major countervailing arguments/examples, but his latest, The Ascent of Money, is pretty good and covers a lot interesting ground.
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David Atkins deserves a lot of praise for that ceremony, as does Zhang Yimou, who launched the bar up in 2008. Atkins worked with about 1/9 the money, but he made great use of the cash.
I didn't particularly like the K.D. Lang cover of "Hallelujah" because of all the vocal effects she added. She has better performances floating around youtube.
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It seems like the majority of cash insurance advances were already recieved through '09. Only about $45 million will appear in 1Q10.
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If only the list went:
1- Wells Fargo
2- Berkshire Hathaway
3- Johnson and Johnson
4- GE
5- US Bancorp
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"I made my last purchases recently between $339 and $350, although I fully expect to see downward price movement on the heels of mark to market fixed income and equity losses. If there is one thing I learned from the recession, if you think you can make 15%+ over time, don't worry yourself about whether you can make 30% in the future."
I would speculate that Fairfax has made big fixed income gains in the the JAN...FEb start to the year. I would speculate they entered the long bond again through US traesuries as their thinking is similiar to that of Hosington....But I agree the wiggles are meaningless.
Dazel.
Ah, sorry for the confusion. I meant future losses as interest rates rise and/or state and local governments begin to selectively default.
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I made my last purchases recently between $339 and $350, although I fully expect to see downward price movement on the heels of mark to market fixed income and equity losses. If there is one thing I learned from the recession, if you think you can make 15%+ over time, don't worry yourself about whether you can make 30% in the future.
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http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1gKwz7qcZfE
Aronstein is one of the better macro oriented managers, and he usually doesn't substitute hyperbole for analysis. I know very little about the overall muni market, but I note that the LAUSD is set to sell $1.75 billion later this month. Los Angeles is currently over $200 million in the whole on almost $10 billion in outstanding debt.
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On the other hand I definitely agree that there is money to be made with the volatility of FFH. I have been so tempted to sell every time FFH takes a big jump, but always resist in the fear that I may get left behind if it doesn't drop back. Guess I'm going to have to suck it up and start playing that game. But again as a small investor it's not so easy with the share price where it is.
eric, Have you had problems getting odd lot orders (less that 100 shares) filled?
I'm not speaking for Eric, but I can only get odd lots filled for the FRFHF shares. There isn't much volume in the stock as of yet.
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TRK looks very attractive after a quick glance. But what do you think about this Oasis Group nonsense? I note that the current CEO is over 80 years old, and his family member, the COO, appears to have limited experience in an executive capacity. Does the younger man intend to expand the business model?
On the other hand, the acquisition of New Hampshire Speedway last year appears to have been at good price, and management didn't impair the balance sheet to get the deal.
I have to do more research, but thanks for the pointer.
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Did we do this thread already? Let me know.
I missed out on BBEP and FUN at their very lows due to an overweighting of certain negative information.
BBEP - I ignored management's history of profitably hedging their cash flow, as well as the value of said assets, which far outstripped the stock price. Instead, I obsessed with management's character and the atrocious corporate governance.
FUN - I focused upon their inability to pass inflation, management's history poor capital allocation, and impending miss on the total leverage covenant. I was pretty sure that the lenders would use cash flowing companies like FUN as a means to safely boost yield. I ignored the strength of the underlying business relative to the stock price, and I didn't precisely quantify the likely effect of a covenant miss. I think management is kind of sticking it to the shareholders with the current buyout price however.
So... fess up. Share your mistakes so that hopefully we will all skip out on them after the next bubble.
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The argument broadly makes sense, but the author didn't put forth any numbers for a reason; as value-is-that-you-get said, there are just too many maybes. As the Kraft deal demonstrates, Buffett wants the synergies for free.
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The writer should have been someone with a more solid foundation in statistics. Nothing advanced, but he should at least know about the central limit theorem. I seriously doubt that a dealer would look at you with "an odd mixture of anger and awe" because you ended a single day with winnings.
That was a quote directly from Thorp, based on his impression of the dealer's thoughts after his first score.
How do I know? Don't ask. :)
Now I must read the book.
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Rosenfield also sold the pizza business at 9x pre-tax income to fund the purchase. Buffett referenced the Post sale from 2007 as an example of how the transaction should have occurred to avoid taxes. On the other hand, that was a reverse Morris trust deal and I don't think that many acquirers would agree to such terms.
The costs of the Burlington deal might be a little higher if you include the sales of discounted companies like JNJ <$60 from Berkshire's portfolio.
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The writer should have been someone with a more solid foundation in statistics. Nothing advanced, but he should at least know about the central limit theorem. I seriously doubt that a dealer would look at you with "an odd mixture of anger and awe" because you ended a single day with winnings.
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Eric - thanks. I actually have some history with that company - one of the heads appears on CNBC sometimes.
They were a net-net at one point - total cash on the books (and no real liabilities) was less than market cap.
Bexil warranted that valuation, IMO, due to the control position of an unreliable partner, the Winmill's.
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Thanks for the letter. I also have a small stake in The Tandy Leather Factory, and it continues to astonish me that people will purchase discretionary leather products in the midst of a deep recession.
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Thanks for the letter. As a DineEquity shareholder, I would like to know why he referred to the IHOP franchise debt as a "dog" ???.
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It's difficult to source the quote from that article. The reporter doesn't state whether the information is first hand, or whether it comes from a biased source; for example, Rosenfield had lunch with hedge fund managers who owned Cadbury.
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Buffett just gave an interview on Squawk Box where he said that he did not support the deal. He noted that Kraft sold their pizza business to Nestle for 9x pre-tax earnings, and that it did not make sense to purchase Cadbury at 13x EBITDA.
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IMO, these guys are now entrenched in a belief and will not change their thesis no matter what. Long term treasuries have suffered huge loses in 2009 and it could continue in 2010. I have read strong opinions from both the deflationary and inflationary camps and I cannot say for sure who will win. I prefer to be more flexible.
Regarding inflation, here is a fact:
http://in.reuters.com/article/economicNews/idINIndia-45428620100115
The CPI is up 2.7% from a year ago while 5 year treasuries are yielding 2.41% and anything with less than 1 year duration is close to 0%. So you need close to a 10 year bond yielding 3.67% or a 10 year committment to ensure "some" real return above inflation. If these numbers don't indicate huge fear already priced in for deflation then I don't know what is.
So to me it is terrible to recommend people buying long term treasuries when you can go out currently and buy very high quality companies at 11-13 times earnings and with dividend yields alone already at or above long term treasuries. I am not talking about cyclicals here, but things like: KFT, JNJ, AMGN.
Cardboard
My guess is that the 2.7% figure slightly overstates the inflation experience of the average household. For example, a large portion of the increase resulted from the gasoline index, yet household energy prices fell with natural gas and electricity. Vehicle sales also contributed to inflation, but new vehicle sales include transfer payments from the government, while used vehicle prices probably benefited from consumers who would have purchased a new car.
I also have trouble believing that shelter costs remained flat. Apartment vacancies in major cities are about 8%. I live in Los Angeles, and I received a $660 per month concession plus a free month in February of '09. I just renegotiated the rent and will only pay $190 more per month. The apartments in my area have not been able to sustain price increases.
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If anyone is in Los Angeles, Gawande will provide a talk on Dec. 14, at the Central Library:
http://www.experiencela.com/calendar/eventmore.asp?key=26899
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http://online.wsj.com/article/SB125746971902632491.html
Mr. Fortuna's complaint lists as co-conspirators two other hedge-fund managers, each of whom allegedly fed him inside information. Neither hedge fund is named but, according to the complaint, one of the hedge-fund managers gave Mr. Fortuna information about a Massachusetts company, while another gave him information about a Texas company.
Mr. Lee's complaint alleges he was exchanging information with at least six companies and one investor-relations firm as well as three hedge-fund managers who aren't named in the complaint. Mr. Far's complaint alleges he was exchanging information with four companies and four current or former hedge-fund managers who aren't named. The complaint alleges Messrs. Lee and Far paid some of their sources $2,000 per quarter in exchange for information. Other co-conspirators were paid $1,000 per quarter for information, the complaint alleges.
They only paid $2,000 a quarter for inside information?
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I'm not familiar with most of the hedge funds named in the article, but of the direct SAC spin-offs, only Prentice Capital seemed to deeply underperform the market.
zenith
in Fairfax Financial
Posted
Well said T-Bone. When the controlling shareholder transparently and honestly communicates his views about the dividend, then caveat emptor. We might lose a bit on tax inefficiencies, but that is hugely overwhelmed by the benefits of aligned incentives.