Parsad

What does that mean, exactly? The warrant price should converge to (common price - strike price) as it approaches the end, and there shouldn't be much risk, presuming it is in the money. What is decaying? If BAC does what is even somewhat close what we think it will, then the warrants should increase in value faster than the common for quite some time. I guess it decays if it doesn't (or people think it won't) make it into the money? The decay means the warrant premium, calculated using Black-Scholes (yes, unreliable I know), decreases in value as the expiry date approaches. So assume in six years, the stock is at $20. There would be no premium at expiry and the value of the warrant would be $20 minus the exercise price of $13...so $7. If the stock for some reason stays at $15 (assume larger than expected legacy issues or loan losses, systemic crisis, whatever), then the value of the warrants say two years from expiry would be worth $15-13, plus probably about a $2-2.50 premium...so less than the current valuation...and that is due to the warrant value decay. Cheers! I see what you mean--I guess since I model it at over $18 (13+current 5), I hadn't really concerned myself with it. My distribution is a lot more common than yours (I'm at a 3:1 common:warrant ratio), so I can understand decreasing to 1:1 in your case. We were nearly the reverse...about 2.5:1 warrrants:common ratio...in dollar value, not number of each! :o We're now about 1.6:1 ratio. As the stock continues to go up, we'll eventually get that down to 1:1 where we will probably hold the rest for a long time...nice fat dividends. Cheers!

What does that mean, exactly? The warrant price should converge to (common price - strike price) as it approaches the end, and there shouldn't be much risk, presuming it is in the money. What is decaying? If BAC does what is even somewhat close what we think it will, then the warrants should increase in value faster than the common for quite some time. I guess it decays if it doesn't (or people think it won't) make it into the money? The decay means the warrant premium, calculated using Black-Scholes (yes, unreliable I know), decreases in value as the expiry date approaches. So assume in six years, the stock is at $20. There would be no premium at expiry and the value of the warrant would be $20 minus the exercise price of $13...so $7. If the stock for some reason stays at $15 (assume larger than expected legacy issues or loan losses, systemic crisis, whatever), then the value of the warrants say two years from expiry would be worth $15-13, plus probably about a $2-2.50 premium...so less than the current valuation...and that is due to the warrant value decay. Cheers!

Our warrant position was over twice the size of our equity position...we're just bringing them more into line. That being said, even with six years left, you still have the time arbitrage risk...thus as time passes, you are going to get decay in the underlying value relative to the equity. Cheers!

Still plenty of room to rise, and lots of room for continued improvement, dividends and share buybacks, but the dumb money is now finally starting to really come into BAC. We have sold about a third of our warrants now as it was a huge position. We have not and will not sell any equity. Cheers! http://www.thestreet.com/story/11802314/1/bank-of-america-analyst-conviction-buy-after-110-gain-in-2012.html?puc=yahoo&cm_ven=YAHOO

Also agree...Looper was terrific. Cheers!

The world, in particular the U.S., would have been better off if we did go over the cliff long-term, as the cuts would have actually started to fix things. But markets seem happier that the can was kicked down the road. Cheers! http://www.cnbc.com/id/100347673

Forbes article on Buffett's $3B+ donation. Cheers! http://www.forbes.com/sites/kerryadolan/2013/01/01/billionaires-dominate-list-of-the-biggest-charitable-gifts-of-2012/?partner=yahootix

Speaking of "The Town", I thought Argo was one of the best movies of the year as well. Who would have ever thought that Affleck was a hundred times the director he is actor? Three movies directed and all three were fantastic..."Gone Baby Gone", "The Town" and "Argo". May be the best start for a director in a while. And he's a far better actor when he's directing himself...amazing. Cheers!

Yes, I liked it other than the super-hero type analogies and dialogue associated with him..."He's the type of man you don't find...he finds you!"..."He's the type of man who will always do the right thing, no matter what the situation." It's actually more of a thriller/detective mystery than just an action movie, but the action is pretty good too. He may be crazy, but there is probably no better action star than Tom Cruise when it comes to that stuff as well. He's fantastic in the fight scenes, and they are pretty brutal...no Jason Statham taking on 20 guys with no bruises...the fight sequences are much more real in this. One of the better car chase sequences in recent memory as well..."Drive" comes to mind as the only other one in the last few years...but Cruise does all of his own stunt driving and it's pretty damn good! Cheers!

AIG runs a new ad campaign. Cheers! http://money.cnn.com/2012/12/31/news/companies/aig-insurance/index.html?source=cnn_bin

I thought both Prometheus and End of Watch were good...except the ends! ;D Quite surprised by how good End of Watch was actually...the chemistry between Gyllenhaal and Pena was really good...they must be buddies in real life. Cheers!

Happy New Year everyone! May 2013 raise your portfolios 100%. ;D Thanks for all your contributions to the board! Cheers!

I have to apologize to Shane from Farnamstreet regarding this! His email ended up in my spambox, and I did not see it until now. He has transcribed Munger's 2008 Lecture at Caltech: http://myinvestingnotebook.blogspot.ca/2012/12/transcript-conversation-with-charlie.html The transcript is for sale on his site for $15 and is going to $25 on January 1st. He is kindly offering it to boardmembers for $5 until January 1st. You should know the video is available for free online if you look for it, but it takes alot of work to transcribe 13,000 words, and Shane has done the work. For the special discount, please use the link below that he has provided: https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=NBNAN9ZKM2QMS Cheers!

Mainstreet is in the news...tenants in Vancouver condos are complaining of no heat or water for 2-3 weeks. The company says they are doing upgrades, but there is now mold appearing in some units. Wait till interest rates rise at some point or real estate prices in Canada correct...this sucker is going to go down. Cheers! http://www.globaltvbc.com/residents+of+a+surrey+apartment+complex+left+in+the+dark+and+with+no+power+while+building+repairs+are+made/6442777591/story.html

I love the last line of the article: After the dot-com crash, it seemed as if “things would turn around. Now, I don't know,” Mr. Neitlich says. “The risks are bigger than before.” Cheers!

Article on how more investors continue to leave equities as companies are left to buy back stock with record amounts of cash. I love hearing people talk about the "death of equities". Cheers! http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/slow-death-of-equities-as-more-investors-abandon-stocks-in-2012/article6742839/

You probably didn't give it quite a chance...especially if you have any adversity to musicals like myself. I don't think most people go into it thinking the whole movie would be singing and no dialogue at all. If you are looking for a fun movie, Le Miz isn't it. But I thought Hooper did a great job with the size and scope of what he took on, and the actors were astonishingly good. By the way, for a guy in a band, Russell Crowe is the weakest link when it comes to singing...and he's the lead singer in his band! Cheers!

Ok, saw Django and Tarantino lost it again in the last 25 minutes of the movie. Don't want to give anything away, but the movie is superb until the handshake sequence. After that, it falls apart and ruins what would have been a wonderful spaghetti western. And what the hell is it with his addiction to creating late 50's, early 60's theme songs for this movies, and then suddenly throwing some Tupac in there for good measure. This guy needs someone to pull the reins in on each movie. Inglorious Bastards was the same way...great movie until the final 20 minutes...ruins another terrific movie! Kill Bill would have been one fantastic movie if anyone had the balls to tell him to cut out an hour from Part I and Part II, and make it just one movie. Entertaining movie, with Oscar-worthy performances from Christoph Waltz and Samuel L. Jackson who both steal every scene! Waltz in particular is even better than he was in Inglorious Bastards. But the movie cannot touch "A Fistfull of Dollars", "For a Few Dollars More" or even "Unforgiven". Cheers!

I ended up seeing Django Unchained on Christmas day. Les Miz might be a really good movie, but I don't think I'll like it better than Django Unchained. I'm going to see Django in a couple of hours. I'll let you know what I think. I hear it's vintage Tarantino, not like some of the crap he's made recently. I really didn't like Inglorious Bastards...just way over the top. You go back to Reservoir Dogs or Pulp Fiction, and he had a much more deft touch. With Les Miz, I think you'll come to appreciate how difficult it is to sing throughout an entire movie, and still have some emotional connection with the audience...this not like those Mamma Mia type musicals...it's incredibly dark, violent, hopeless and unfortunately true to what life was like back then. Jackman may be one of the most underappreciated actors in Hollywood, since he makes all those X-men and Wolverine movies. Probably no other actor in Hollywood has the physicality he has (he's a big guy) and still has a very soft touch with his dialogue. I think he may be a shoe-in to win the Oscar. Anyway, I'll give you my review of Django later tonight. Cheers!

It was better than "The Master"...Hooper with his camera work created an intimate atmosphere for his characters that musicals don't normally provide. Cheers!

I cannot stand musicals...not at all! All of our New York board members are yelling "New York wouldn't exist without hedge funds and musicals...how can you not like musicals...what is wrong with you, man? You're East Indian for crying out loud. Every movie you make in Bollywood is some bizarre musical full of singing and dancing!" Nope, just never liked them. Personally, I subscribe to Tom Hanks sentiment a few years ago on Late Night With David Letterman: "Dave, I personally cannot understand how people just spontaneously break out into song and dance...not a fan of musicals!" Just never enjoyed them after watching a few as a young boy. Well, I've got to tell you that Tom Hooper's screen version of "Les Miserables" was terrific...probably one of the best movies of the last few years. Hugh Jackman and Anne Hathaway's performances are the type that just stick with you after you leave the theatre. I was just blown away by the size and scope of the movie, and how well it was done. Didn't even notice that people were singing! ;D So for you guys dragged into the theatre by significant others, friends or family to watch this, you won't have to suck it up. You may actually really enjoy it. Cheers!

I can! ;D Cheers!

You can't look at them in vacuums...each has different strengths and weaknesses based on underwriting, investment results, leverage and lines of business. Fairfax has the best investment results, but weaker underwriting due to lines of business and leverage. Markel & Alleghany have great underwriting due to lines of business, culture and leverage, but investment results aren't anywhere as good as Fairfax. Berkshire is the rare insurer that is incredible at both with less leverage, but far too big and unwieldy now. Cheers!

After Alnesh went through his divorce, he decided he's going to ask for tax returns from prospective partners...they must bring equal or better assets and income into the relationship! ;D So far no dates...may have to modify his request! Cheers!

Agreed. You guys all know what your estimate of intrinsic value is for BAC. You know the risks associated with legacy issues. You know the progress they've made. Determine what price you want to buy or sell at...simple...who cares what Whalen or anyone on here even says. We average in and we average out...it takes the worry out of the whole thing...and then we hold the portion we would like to hold long-term. And yes, Whalen was being a douche a couple of months ago, saying that BAC was undercapitalized...now he's just being a bigger douche by changing his opinion overnight! Cheers!