bargainman

Yes I think you're right about the NOLs. For some reason I thought they had recognized them once again, but that's not the case after a quick read of the 10Q and annual letter. That said, it's still an asset going forward if they can use it. I think it lasts till 2030 so my guess is they'll get some use out of it. So, the question is do you use that in the IV calculation?

Based on what IV calculation? They're trading a bit higher than book value, although I'm not sure what to make of book value given the large NOL presence.

Just discovered this site: http://lab.arc90.com/experiments/readability/ Looks pretty interesting to help reading.. not sure how well it'd work for 10Qs etc though..

Well Buffett says a lot of things. One of them was also that if he has to go to the Nth line in a spreadsheet to make his investing decision he isn't interested. That would seem to suggest that he also believes in the law of diminishing returns no?

The terrible tragedy in the gulf seems to have gotten a lot of press local to the gulf and aimed at BP and the Government. My question is, with the loss of oil revenues, fish, tourism etc, seemingly in massive scale, will this be enough to tip the US into double dip recession? Also note that the stimulus money is going to be running its course, as is the cash for clunkers and other government give aways. Just wondering what the sharp minds on this board think...

Hmmm.. I wasn't very impressed by his standpoint on this one. Why would the users not pay? And what's wrong with a gov committee assigning a rating agency?

Well Microsoft customers like the extremely pricey software they bought from Microsoft 5-10 years ago, but have no incentive to upgrade and thus send more money Microsoft's way. Microsoft hasn't put out a desktop product in 10 years that presents a compelling upgrade, so they are missing out on those potential revenues. They try to force people to upgrade via licensing and lawsuits and such but the new products simply aren't better so everyone drags their feet in upgrading. I have a copy of XP that I bought 5-6 years ago which, despite not being Vista (or perhaps because it is not Vista) suits my needs fine. Even if they do "fix" Vista I have absolutely no reason to upgrade. My Microsoft Office suite is from 2001. I might use these for another 10 years. Compare that to seemingly disposable hardware and software sold by Apple such that everyone upgrades every 2-3 years. Google has a different revenue model but as long as they remain current/relevant they'll continue to derive ad revenue from their products. tiddman. See here: http://www.sec.gov/Archives/edgar/data/789019/000119312510090116/d10q.htm "Windows Division revenue growth is directly impacted by growth of PC purchases from original equipment manufacturers (“OEMs”) that pre-install versions of Windows operating systems because the OEM channel accounts for approximately 80% of total Windows Division revenue. The remaining approximately 20% of Windows Division revenue (“other revenue”) is generated by commercial and retail sales of Windows and online advertising from Windows Live." They don't care if you upgrade the software. Most of their sales for windows come from new machines. My guess is that's also the case for Office. MSFT is pretty much becoming an enterprise company, they just keep trying to be a consumer company and keep failing.

Also notice who made it into: http://www.theglobeandmail.com/report-on-business/managing/executive-compensation-2009/which-ceos-own-the-most-equity-in-their-companies/article1581565/ Also Watsa, and Flatt (Flatt was in the first list too)

I find this interesting. Biglari has stated in previous annual meetings that he hopes to expand SNS to 2-3x the current number of stores through franchising since it's a more capitally efficient model. I forget the actual number of stores they are aiming for. But I find the assumption that he's going to let SNS shrink into oblivion a little pessimistic. pillaniman, what about your conversation with Dash made you decide to move on?

well a few days ago it was a short recommendation on the street.com I think, plus there was a negative article on seekingalpha. So maybe it's a bounce back or some one issued a buy rec at this price.

I'll second that. Add to that the quoting of Buffett out of context, quoting random value investing platitudes, and all in your first 10 posts on this board! I'd say.. that speaks volumes!

My only nit with the article is this: "Mr. Biglari’s preference for targeting underperformers and insulting their leaders, however, is a marked difference from the approach of Mr. Buffett, who seeks companies with strong competitive advantages and solid management." Buffett does what the article describes now, but he didn't back when he was running his hedge fund. He certainly was a bit more like Biglari back in the day when he had less money.

Um.. what 'classic buy and hold value investors'? usually the classic buy and hold variety are the growth investors and the Bogleheads. The classic value investors sell the stock when it hits intrinsic value! Buy when it's at 50% of IV, sell when it's at 90%. That's the 'classic' Graham Value investor no? Buffett's whole 'buy to hold' bit only came after he was influenced by Fischer and Munger, and after he had way too much money to be trading in and out of stocks all the time. I guess I'm splitting hairs, but I agree with the rest of your statement.

Not sure if someone posted this before but I haven't seen it.. Looks like they got the recommendation from an outside firm? http://www.sec.gov/Archives/edgar/data/93859/000092189510000848/form10q07428_04142010.htm from the 10Q: " The Committee engaged Towers Watson to assist in formulating an appropriate incentive compensation arrangement for Mr. Biglari. The Committee considered data provided by Towers Watson regarding the total remuneration of chief executives at a peer group of 36 companies, consisting of restaurants, asset managers, and diversified holding companies, with responsibilities similar in scope to Mr. Biglari’s. The Committee determined that book value gain was the fitting benchmark for calculating Mr. Biglari’s incentive compensation, for growth in book value (adjusted for accounting and other noneconomic factors) is the best proxy for value creation because it incorporates earnings/loss as well as unrealized gains and losses on investments. Without factoring in the benefits of the Biglari Capital acquisition, the Committee recognized that the incentive compensation formula it selected would provide Mr. Biglari with generally competitive compensation, as compared with the peer group’s remuneration when annual book value growth is between 8% and 18%. However, Mr. Biglari’s compensation would rest in the lower ranges of the peer group when annual book value growth is below 8%; when book value rises above 18%, Mr. Biglari’s compensation would be in the higher ranges of the peer group. The Committee believed that this structure creates a powerful economic incentive for Mr. Biglari to increase the Company’s per-share book value over the long term. In addition, the Committee believed that the compensation structure is in accord with the Company’s entrepreneurial culture of pay for performance."

txlaw, nice summary. For those who haven't seen here is Bruce's interview about C: http://www.morningstar.com/cover/videoCenter.aspx?id=324901 He makes about half the points you just made in the interview.

Oh my.. Opihiman, are you serious!? You're telling Ericopoly something like "it speaks volumes"!? Ericopoly has been around this board since the MSN board days, and has spoken volumes, let me tell you! Volumes of incredible insightful information and spot on calls! I'm not sure how long you've been lurking, but your profile says you've posted 8 times. Now I'm a relative newbie and am in awe of some of these guys, but let me post my newbie opinion... No one said anything about only being able to post questions about valuation on this board. In fact there are posts about taxes, cross country currency issues, brokers, arbitrage, ticker symbols etc etc etc. On the specific topic of options, options are a technically challenging beast, and asking for a walk thru on a trade is nothing out of the ordinary IMO. You need to understand the mechanics of the trade before you can take advantage of any valuation insight. There are many here who 'trade' on valuation, and hence are 'traders'. To me the distinction between a 'trader' and an 'investor' is mostly semantic. (with some exceptions for chart reading and tea leaves). Anyway, you may want to take it down a notch, and not tell senior members of this board what not to talk about. And please don't make snippy snooty comments like "speaks volumes" to the senior members of the board that we all respect and enjoy commentary from. from an Ericopoly fan.

Hmm, I'm not so sure why this is considered a 'trader's' question. Buffett used Puts to get into KO years ago. He also recently sold a pile of index puts he was much maligned for. Others on this board have often spoken of options trades, both puts and calls, on stocks they've fundamentally analyzed. I'll just mention a coupe of things. When you sell puts, you are taking all the downside risk and getting a limited upside gain. It's kind of like a bond where you have the risk of default, and only get a fixed payment/max profit. So it's important to look at companies you think have limited downside. You may also want companies you don't think will run away on you. If you sell a $20 put on a $23 stock, and say you get $1, and then the stock goes from 23 to $50, you get to keep $1! That's it. So there is the risk of losing out on gains.

If you're really itching to get gold, just get some GLD call LEAPs or something no? That way you limit your downside. If GLD goes up then you can roll them up and lock in some gain but if it crashes you only lose a smaller investment.. probably the best way to ride a momentum 'stock'...

TWACOWFCA, where do you get the WSBASE information from? Is this your own custom PDF/XLS graph, or is it available publicly? Thanks, bargainman.

Does anyone know for sure if this compensation agreement replaces or is in addition to his 900K salary? I've read opinions either way and haven't seen it spelled out one way or the other. Anyone have the scoop?

I don't know, the thing that bothered me is his statement about Buffett. He went on about Buffett's investing prowess overshadowing his other attributes like the way he treats his family.. Uh.. did he read Snowball? From everything I read he was a pretty mediocre, even lousy, father. I mean his friends would have to remind him "those are your kids you know Warren". I'm not sure why Pabrai would make a statement like that.

Wow, looks like they agree with Bruce from FAIRX.

Right, I didn't say they had a moat based on the mp3 format, they don't. That said, until recently sales from the iTunes store were in Apple's proprietary format, so at the time they did have a lock on the format. Ie if you bought a lot of songs from their store, you would be stuck buying iPods into eternity. That changed a while ago. But... what I was referring to was the iPhone and iPod Touch, and iPad. They have a ton of applications. 10s of thousands or more. (maybe hundreds). People buy applications on their iPhones, they want to keep using them the next cell phone they get. Developers want to sell to high end consumers like iPhone users. Apple creates and owns the distribution network. That == moat.

Has anyone bought FRFHF.PK in odd lots? If so, what broker?

omagh, care to give us the quick 1-2 paragraph 'pitch' on why you think WRB is a good company/investment?