bizaro86

I wonder if this is partially related to the recent permission to go to 25% of BAC. Seems possible that he doesn't want more than $X of banks, and likes BAC the best. So the selling of the others could be rotating in to his first choice which was previously not permitted.

I got some Kodak OTM puts at the open.

That is for the first six months of the year, right? Making money in 6 months during a pandemic? Really? I am stealing Parsad's favourite: cheers! The point of a long-short book is for gains on the shorts to offset losses on the longs when unexpected bad things happen (for example, a worldwide pandemic). If your shorts aren't making money (to offset losses on longs) during an event like that, maybe not doing them would be a better choice? Or am I missing something here? If so, I'd love to know what it is...

I would say its a bit concerning that they managed to lose money (significantly) on both the long and short side. Realized plus unrealized losses of $821.9 MM for the long side, and $222.4 MM for the short side. Should be making money on one side of a long-short book...

The idea that being true to oneself could be the highest value in a belief system makes me sad. Can I suggest the golden rule as a proxy for integrity - "Do unto others as you would have them do unto you."

Or maybe strongly held beliefs (backed up in many case by previous large Fairfax projects) are being held on to even in the face of disconfirming evidence. “For some of our most important beliefs, we have no evidence at all, except that people we love and trust hold these beliefs. Considering how little we know, the confidence we have in our beliefs is preposterous—and it is also essential.” —2002 Nobel Laureate Daniel Kahneman Moat beliefs aren't necessary to change, which is why people don't change them. However, if a management team begins to take shareholder unfriendly actions, it's usually best to assume those actions will continue and not change back. You can see that on this board on the Biglari thread. Many folks were defending how optically cheap that was long after it became obvious that ~100% of the value was going to Biglari and ~0% to outside shareholders. I don't think Fairfax is at that level, but there are enough examples of shareholder unfriendly actions that a management discount is absolutely appropriate. Maybe that hasn't always been true, but like Munger said: "We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side." Dismissing cogent arguments as paranoia is pretty obviously an ad hominem attack, imo.

Stop defending him....this one is not even close.... The revised Rivett/Bitove bid works out for something like $60 million in total to acquire a company that has $70 million CASH on its books and NO DEBT and no unfunded pension liability plus it has various minority investments that conservatively will raise a further $100 million when they are sold. You're asking some shareholders to stop defending him, but have you or anyone asked Prem why he is supporting the Bitove/Rivett deal? You guys always talk about self-dealing at Fairfax...show me some frickin' examples. The only things you guys point to is Resolute and now this. Resolute was to the benefit of Fairfax shareholders. If the Bitove/Rivett deal wins, do you think there might be some long-term opportunity for Fairfax? And why are you pissed off at the investor and not Torstar management...they are the ones who should be explaining why they are supporting a specific deal to all shareholders. Cheers! Do we get to count the time where they sold a piece of FIH's best asset in a way that guarantees OMERS (the buyer) a profit and allowed them to book huge management fees? Seems like the only loser there is FIH shareholders. How about the time FAH shareholders sold one of their best assets to the mothership for way lower than a recent outside bid as part of a low-disclosure deal? Just two more examples from this year, to go along with Resolute, Torstar and the multi-voting shares.

Do you think continually acting against the best interests of their own investors (and those of their subs) will enhance their reputation?

There was an article in today's Globe which was even more disturbing. https://www.theglobeandmail.com/business/article-nordstar-ups-torstar-offer-in-what-could-end-bidding-war/ It would seem that the alternate bid might be superior because the proponents are suggesting that they are prepared to both bid higher in a cash-up-front perspective PLUS they have suggested that they would include contingent value rights to Torstar shareholders. Despite that, it seems like Prem has locked up our Torstar shares for the lower valued bid. I think that Prem might have a bit of explaining to do during the next quarterly teleconference if he is truly accepting an inferior bid from a former FFH executive. It's looking more and more like BearProwler called this one correctly... SJ https://www.bnnbloomberg.ca/torstar-bid-raises-shareholders-ire-sparking-calls-for-osc-probe-1.1466294 From the BNNBloomberg article: "It's hard to understand the [families’] actions," said Groia, who worked at the OSC as associate general counsel and director of enforcement from 1985 to 1990. "My experience as a former regulator is any time you can't understand why people are reacting the way they are, the general answer is that there's something motivating them that we don't know about. That's what an investigation is for." Fair and friendly....hardly..... It's puzzling how often FFH ends up being involved in transactions that have a bad smell to them. SJ It's not that puzzling anymore, imo. I think when you have a large enough sample of actions, Occam's razor applies.

Did you mean OMERS? Fairfax already marked the airport stake up to the value OMERS paid for it. That's a bad mark (imo) because they effectively guaranteed OMERS the price - if they don't IPO it at a certain valuation, OMERS gets more shares to make up the difference.

I think at this point Fairfax companies are getting the valuation multiple they deserve based on the way minority shareholders are treated. At the parent there is family control through unequal voting with a next generation of unknown quality poised to take over. At India, they press released the sale of part of the Airport at a high price and then took a big huge incentive fee based on that mark. Then when the details come out it turns out they only got that price because they guaranteed the valuation to a cozy buyer. At Africa, they sell their crown jewel asset to the parent with limited disclosure at a much lower price than previously agreed with a third party buyer. They bury that at the bottom of a press release about selling a chunk of the company for assets of unknown quality. At some point it's reasonable to assume Fairfax management is willfully mistreating minorities.

Aren't they just distributing 7 year warrants to shareholders? I doubt that results in any new equity capital on their balance sheet until the 7 years are up. And not at all if they end up distressed before that. But it would dilute some of the conversion upside. If this was a rights offering where they sold new shares for cash I'd agree it was great for the prefs, but that isnt my read of what's happening.

I vote eventbrite. It seems like potentially a high moat business if they can get scale (see ticketmaster) and a place where the competition's margins are so high that there is opportunity for a challenger (see Ticketmaster again).

Yes, if I highlight a sentence and click "quote", the text box should only have the highlighted sentence featured as the quote. Another one is auto-scaling of images (prevents posting an image and having it blow up the viewing screen). I hope Sanjeev is not spending money to implement a forum engine from scratch. If he is, then it's IMO a waste of time and money. And the upkeep/fixes/maintenance is likely to be money pit too. OTOH, if CoBF is going to use off-the-shelf engine, then the engine-specific features in the wish list are pretty much DOA. I'm pretty sure most off the shelf forum software has a variety of options that can be implemented (or not) at the admins option. I agree custom software is unnecessary.

I definitely like the ability to read posts in chronological order. Some sort of "thanks" or "like" system would be a good idea. If you publish a leaderboard, that might incent quality posts?

My tips for getting kids to eat veggies (i have 2 boys age 4/6). I know new parents get 250% of the advice they want, but you did ask... - put it out every single meal. Preservance is key here. 1/3 is hard, and it does get easier. - put it out first, and when they are hungry. This worked really well with our youngest. He would be hungry and at the table for lunch, and I'd be finishing up the pasta or grilled cheese or whatever, and we just put the veggies on his plate and walked away to finish the other stuff. - let them help with it somehow, even just cutting a cherry tomato in half or "helping" peel a carrot gives them ownership - get the good stuff. My older son wouldn't eat tomatoes until we switched to a small farm-owned produce stand for them. They're way better, and now he has tomatoes, cucumbers, and carrots with every single lunch.

I never would have thought the market would rebound as fast as it did, but I still meaningfully bought equities in late March. A big decline has generally been a good time to buy stocks and reduce cash weighting, and the perfect is the enemy of the good there. Even a simple re-balance would have seen a bunch of equities purchased.

There is a difference between going all in and adding a few extra percentage points of long exposure after a 30% drop. Especially when you have a big cash position. The reason the market has been negative on BRK is that the "story" in the stock was that the big cash position would provide huge upside after buying low during the next drop. And then I believe WEB was a net seller during the worst of the draw down. If there is a second wave drop and he ends up deploying a big chunk of the cash that will be a double win - the profits on the investment plus the reputation gains (which flow to the multiple).

SD - I think this might be the best comment I've seen on here in quite some time.

The consensus seems to be that the value of the float liability is less than dollar for dollar because maybe it never needs to be paid back. If you invert that, what's the value of a cash asset that earns ~0 and may never be put to productive use? Possibly less than dollar for dollar is appropriate there as well. BRK sentiment is just far too negative right now, which is part of the reason I am buying LEAPS. The option prices say it all, such a low amount of volatility priced in. But we have seen BRK move huge amounts in short periods of time in the past and we will see it again. Not to mention the ridiculously low Price/Book ratio. I agree with this entire post, but especially the part about sentiment. I converted a big chunk of my BRK position from shares to LEAPs on Friday. 2:1 ratio of deep ITM calls to shares. If it continues to drop I'll do more. Biggest reasoning is I think risk of permanent impairment at the current price is very low.

The consensus seems to be that the value of the float liability is less than dollar for dollar because maybe it never needs to be paid back. If you invert that, what's the value of a cash asset that earns ~0 and may never be put to productive use? Possibly less than dollar for dollar is appropriate there as well.

bizaro86, not taking a shot at your thoughts on the float liability, but rather want to see if you can poke holes in how I think about it. I'll use a hypothetical company that is 100% capitalized by float as my example. Let's assume we issue a $1.0m policy at the beginning of every year that gets paid out at the end of the year. We take that $1.0m and invest it into Treasury bills at a 10% rate (day-dreaming over here, I know). Well at the end of the year we would have $0.1m in the bank, $1.0m in a Treasury bill, receive cash inflows of $1.0m for the new policy issued, and pay out $1.0m of insurance claims/expense for the beginning of the year policy (assuming cost of float is zero). In this situation, the equity holder would be able to receive a dividend of $0.1m, unencumbered by the float liability. We can have this same situation occur forever into perpetuity, collecting $0.1m every year. My question becomes, why knock something off of the equity value if we never have to truly pay back the float and it doesn't cost anything in interest? That's $0.1m in my pocket every single year, just as if I funded the company 100% with my own money. The risk of having to give back the float to its owner is more than the risk of having to give back the equity. Maybe that isnt very likely, but the probability is more than zero. Secondly, BRK doesnt own any theoretical insurance companies. In the real world, they have to hold regulatory capital to write insurance, and some of it is equity. So that $1 MM of float comes with some money as cash earning 0%. That equity could be earning more in non-cash investment. When Buffett is talking about how they need to keep $50 or $100 B in cash in case they need to cover a bunch of claims when equities do 30 or 40% drop, the opportunity cost of the float becomes pretty real.

I believe that is the reason given during the 2019 annual meeting. PSR is fancy jargon used by the RR majors for effing their customers. I think there's a balance there. The idea of scheduling trains to run at a specific time vs whenever the customer wants is probably less convenient for the customers, but seems fair. I dont expect the common carrier airlines to fly whenever its convenient for me. I either fly on their schedule or pay to fly privately. Railroads also have historically had a bunch of unnecessary costs in the system. As an example, Hunter Harrison moved most of CP HQ staff from expensive downtown office space to a building they already owned at the rail yards. I think the kindly neighbour vibe (from both WEB and the BNSF management) is ok, but there is some level of profit maximizing that is appropriate as well.

I'm not saying it isnt cheap (and I'm long) but if you count the equities you are implicitly including a bunch of the value of the insurance. There were over $160 B in liabilities related to the insurance operation last quarter. I get the concept of float, but I think treating that as equity (vs a long term cheap loan) is an aggressive way to think about it. If you wanted to sell the insurance cos without their financial assets but with their policy liabilities, you'd be sending a bunch of money out the door to get someone to take them.

Yes. Storage will sell into any near term strength whenever the front month gets close to or higher than the out months.