Nnejad

I think $130 million in gains from Abitibibowater this quarter; Also a large amount invested in 10% abitibibowater notes which should help future yields; Euro down, so expect some currency translation losses there. There have been some terrific results in their biggest investments, approximately: Sandridge, 45% ICO, 36% USG, 24% Wells Fargo, 24% But that may cancel out with some of the other ones which haven't moved much. What may be more fun is the growth in Fairfax Asia, and the shareholder letter. But I agree that Q4 may not do much to move the stock price in the near term. Now, if deflation kicks in . . .

I'm pretty sure that as soon as they start coordinating, you have to consolidate their ownership in filings... at least, that's definitely true in certain situations.

While we have had great investment success in the last two years, our net gains include the absorption of some major other than temporary impairment charges, mark-to-market losses and realized losses over these two years, as follows: 2008/2009 Other than temporary impairments (“OTTI”) 1,351.8 Mark-to-market losses 704.2 Realized losses 306.0 Included in OTTI are Level 3 ($226 million), Torstar ($175 million), Canwest ($121 million), Frontier Communications ($84 million), Dell ($65 million), U.S. Gypsum ($61 million), Brick Group ($40 million) and SFK Pulp ($31 million). Included in the mark-to-market losses are Abitibi ($336 million), California state bonds ($67 million) and Mega Brands ($37 million). While Canwest is a permanent loss, the game is far from over on the other impairments and mark-to-market losses. However, our balance sheet is very sound as we have written down these investments to market value.

I'm surprised no one's caught the $17 gain for Fairfax in the coming quarter from this. http://www.shearman.com/Shearman--Sterling-Scores-Victory-for-Fairfax-Financial-Holdings-Limited-12-09-2010/

No one caught this SAC mention ? http://online.wsj.com/article/SB10001424052748704377004575651260207181920.html?KEYWORDS=rothfeld

http://www.bloomberg.com/news/2010-11-18/watsa-modeling-buffett-leads-fairfax-higher-canada-credit.html

CNA Financial - it almost had me there. But just on a first glance, 12 billion in Life Insurance reserves means the life business is a significant component. And I don't know who wants to be in that business right now.

Philadelphia Consolidated. A great US insurer that had an unbelievable underwriting track record. It was a seperate public co, but it was bought out by Tokio Insurance in 2008 i believe. You can still look up the track record though if you want through SEC filings, ticker was PHLY.

"Fairfax has purchased 323,500 of its subordinate voting shares at a weighted average price per share of Cdn $371.90 under its Normal Course Issuer Bid which commenced September 24, 2009 and will terminate on September 23, 2010. " http://biz.yahoo.com/iw/100922/0665491.html?.v=1

You've got to wonder what makes people so thick as to think they understand a better formula for understanding the economy then hundreds of years of economic thought. Anyways, the argument is asinine for numerous reasons,number 1 being, he's double counting by adding changes in private debt. If I compare two of the exact same scenarios, except in the second one i borrow 150 from my neighbor that would of spent it, and I spend it myself, GDP is the same in each, aggregate demand is the same in each. Adding an additional 150 by adding the change in private debt makes no sense. If my neighbor wouldn't have spent it in example 1, but i borrow and spend it in example 2, then I actually have boosted GDP by 150 in example 2 versus example 1. BUT AGAIN, there's no reason to add private debt. Someone mentioned above something about it all being foreign debt. That is correct. Anyways, what is important about changes in private debt (and the author of that article deserves no credit whatsoever in seeing this) is that if i borrow 150 that my neighbor wouldn't have spent, and i do this year after year, we can have quite a conundrum to deal with. Why isn't my neighbor spending it at all? Why am I borrowing it? And can I afford to borrow it? A large change in private debt like the one that has occurred lately in the US shows that a subset of the population with money isnt spending or investing, and then another subset of the population is. And it just so turns out that they couldn't afford to spend as much as they did. So if it unwinds, eventually subset A has to either learn to invest or spend or, or do nothing. Subset B has to cut back and live within its means. And if subset A actually does nothing with it, it will hurt GDP from the inflated levels. Yes, that is a real risk.

I noticed you left out the 85 million in cash and investments. Why did you leave out 85 million in cash and investments? Well, and you subtracted Western Sizzlin's debt but you forgot to add any of its value.

I know when I want to trade on the TSX using Etrade, I get screwed once on the currency conversion. Then the trades are 20 bucks each along with a lot of inefficiencies ( I can't do good for 60 days, i can't switch orders after placing them) . Finally, I get screwed again on when I convert back.

Problems with two passages: When you buy a stock, because it has surplus assets or a good yield or a great safety margin, you are really making a bet on regression to the mean. We are really counting on the fact that current unpopularity will fade, that the current problems in the industry will dissipate, and that the fortunes of war will move back to normal. Well, as a provable, statistical fact, industries are more dependably mean-reverting than stocks, for individual stocks can on rare occasion, permanently change their stripes à la Apple. (Or is that à l’Apple?) Sectors, like small caps, are more provably mean-reverting than industries. The aggregate stock market of a country is more provably mean-reverting when mispriced than sectors. And great asset classes are provably more mean-reverting than a single country. Asset classes are the most predictable of all: when a bubble occurs in a major asset class, it is a near certainty that it will go away. To be more serious in my criticisms, a potential weakness of the Graham and Dodd approach, as it is usually practiced, is in its reliance on low price-to–book (P/B) ratios as one of its cornerstones. Low P/B ratios are, after all, the market’s way of saying “these are the assets in which I have the least trust.” It should not be surprising, therefore, that when you have a depression, or nearly have one, that more of these “cheap” companies go bust than is the case for the “expensive” Coca-Colas. A, that's not why i buy a stock. B, that statistical data is unfair. Companies expected to go bust will go to low P/B's, first.

I lost a little more respect for Grantham after reading the last piece of this letter... entitled: “Friends and Romans, I come to tease Graham and Dodd, not to praise them.” (On the potential disadvantages of Graham and Dodd-type investing.) ...

Thanks for the Koo article. He's someone I need to start keeping an eye on for new material. Two parts really disappoint me about this Hoisington letter. One was already mentioned: that he references GDP growth of one bubble era and compares it to today's era to conclude that presto, government spending is bad. Second, he totally misunderstands Keynes. You can't point to studies on the effectiveness of government spending done in periods of prosperity and high private sector investment. In these periods, it is inefficient for government to take resources and use it on public spending. But when fear is prevalent and private sector investment drops off a cliff (and so idle saving is everywhere) (which is the situation where Keyne's whole book is about), to let fear rule and let this money sit idly is the worst thing possible. Government has a situation: a ton of money is risk averse and is willing to be lent to them at next to nothing. Meanwhile unemployment is high. Combine the use of the two resources to produce something productive in the interim, until the private sector is willing to step in. Then and only then, should the government step back.

Ugh. Disappointing, to say the least.

realized prices are often 10% below listing price, at least. So i doubt a $900 avg realized price is correct.

It's important to remember the 400 million is just in US stocks. There is Canadian, Euro and Asian companies, as well. Brick group alone has increased by 75 million this quarter.

For what it's worth, over the last two years, the average FAA staffer went from earning $109,000 to $121,000. This is for a staff of 43,000 full time equivalent employees. Some people obviously work more. So, when you say, that the number of staffers making over X has jumped since the Democrats came in, that means nothing to me, you, or anyone. I can tell you the budget has gone up with inflation. I can't comment if 5% of their staff now makes over some threshold, although it wouldn't be surprising given how close 170k is to average earnings (especially since some people work more than full-time). I can't comment on what anyone in the FAA does, whether they deserve it or not, because frankly, i don't know. And either do you. What i do know is you're not even willing to take a few minutes to delve into some possible, more reasonable explanations for the statements you throw out. Something better than "Washington gone crazy" . . .

Name recognition. Advertising budget. Trusted vendor relationships. Site infrastructure costs. Working out the kinks of the business. It's an extremely difficult business to start up- you're going to lose a lot of money in the first seven years. Look at amazon from 1996-2001. They lost 2 billion dollars in operations. I wouldn't have any faith in a new online competitor coming into the market today. Overstock has come up with a niche model that makes business sense. I think it will be able to earn attractive returns in it.

I recently invested. Overstock's fulfillment business will continue to be a gem. Lets say you have something unique and different you're trying to sell; post it on Amazon, and it gets lost within the millions of other items. On overstock, you're more likely to find an audience. It has other advantages for vendors as well: vendors can use multiple channels at once; some are more concerned with faster sales than better terms; there's a menu cost with using the biggest competitor (too many goods means you'll get ignored); For customers, i'd say its the best place to look for out of the ordinary purchases. For example, I just bought my girlfriend jewelry from Worldstock- their section which showcases a collection of goods from artisans all around the world: Ghana, India, Morocco, etc.. It's beautiful, unique, and it was cheap. http://www.overstock.com/Worldstock/Top-Sellers,/top__sellers,/6/store.html How successful has it all been? From 2004-2008, revenue from fulfillment grew 24% annually. The recession has slowed it down in 2009, yet sales are still up 2% for the 9 months. For the latest 3 months, sales were up 6.6%. I think Q4 will be nearer to 15%. Finally, they've set up logistics for international sales and they are also beginning operations around the world. To any extent that they are successful in using their US expertise and concept internationally, then that's even more potential. As for competition; throughout all this growth for itself and its competitors, gross margin has actually been trending up rather than down. And as long as sales keep increasing, they'll generate extra cashflow from its favorable working capital structure. (they receive payment upfront, they pay vendors later). I think the future is bright. Chart's attached.

Fourth Quarter 2009 Summary: - Consolidated sales and operating revenue of $361.4 million - EBITDA of $30.8 million is the Brick Group's highest reported quarterly EBITDA in its history - Net income of $12.2 million or $15.3 million before $2.8 million in amortization of warrant issuance costs, related to the Fairfax letter of credit facility, valued using the binomial option pricing model and severance costs - $69.2 million Asset Based Credit Facility undrawn and available at December 31, 2009 - $19.5 million cash and cash equivalents at December 31, 2009 - $72.3 million reduction in accounts payable and accrued liabilities from December 31, 2008 - Corporate same store sales growth of 4.9% in December 2009, and preliminary corporate same store sales growth of 4.2% in January and 5.2% in February 2010 Historically, 4th quarter is about 28% of sales.

Well one thing that sticks out: If you take market cap and divide it by owner earnings, you get the P/E ratio, not the earnings yield. Owner Earnings / market cap gives you the yield.

wow, that is terrible. Which broker was this, if you do not mind?

Included in OTTI are Level 3 ($226 million), Torstar ($175 million), Canwest ($121 million), Frontier Communications ($84 million), Dell ($65 million), U.S. Gypsum ($61 million), Brick Group ($40 million) and SFK Pulp ($31 million). Included in the mark-to-market losses are Abitibi ($336 million), California state bonds ($67 million) and Mega Brands ($37 million). While Canwest is a permanent loss, the game is far from over on the other impairments and mark-to-market losses. However, our balance sheet is very sound as we have written down these investments to market value. Anyone still following Abitibi in bankruptcy? If I'm reading the reports correctly, it seems like they've generated 100 million in cash in each of the last two months??!?? http://sec.gov/Archives/edgar/data/1393066/000119312510047901/0001193125-10-047901-index.htm