Parsad

Sanjeev, for clarification, by book value do you mean tangible bv or regular bv? Of book. As the company gets stronger and they run off litigation and losses, then book becomes a pretty good proxy for the value of the company. Presently, I would prefer if they just bought at tangible book or less, but as the issues around the company disappear over the next few years, they could go up to 90% of book on buybacks. But when the company gets up there, then I would prefer if they just started paying larger dividends, as many investors could then allocate it for better returns even after tax. Cheers!

Unfortunately, I think you are correct...that is the message, whether they want to convey it or not! I think they'll be able to return the equivalent of about 50-60% of earnings because of the litigation and loan loss overhang. Once they settle some more cases and housing is in full recovery, that will increase to 80-90% of earnings that could be returned as long as they maintain their fully-phased in Basel III status. As long as they stay under 80%-90% of book, I'm more than happy to see them buy back shares. Or if they decide to go the 50/50 way of buybacks and dividends, I'm ok with that too. At 90% of book or better, I would prefer if they returned far more in dividends than buybacks. Cheers!

I don't worry about what Einhorn or anyone else says...so it's a non-starter. How much money would I have lost over the years...let's rephrase that...how much would I have not made, if I had listened to everyone telling me how wrong I am about my analysis. DELL is our third largest holding after today! Cheers!

And that is 100% the same issue as with the buybacks. So that noise just filters out and we are exactly as I described it. X equals X. This sucker is getting damn cheap! Crazy. Cheers!

Tombgrt, I don't know if you are a shareholder or not, but for what its worth I about jumped thru the phone at DELL IR the day of the announcement. I'm sure Longleaf was just in pure shock. I'm not and haven't been so far. That might change in the future. I'm sure they were in shock, just like Prem Watsa probably was. I just don't see how this can ever be a good move. Maybe someone can explain the rationale to me. I believe the company is quantitatively cheap but generally I look for certain qualitative elements. Great management is a plus and capital allocation is just one of the factors. I absolutely love owner-operator companies but they make mistakes too. Just look at DWA and what happened there with all the buy backs, total waste imo.. The dividend was done to emphasize the fact that they felt that cash flows going forward would grow. It wasn't the best use of the capital, but it reinforces their belief that this is a mature business, with regular, growing cash flows. They can still issue the dividend and buy back lots of shares. The dividend isn't going to stop their ability to do that, as they have a ton of liquidity and a ton of free cash coming in every quarter. Cheers!

It was a very good read! But after reading it, you realize that Steve is like all of us and other investment managers...no one has any clue exactly where things are headed...uncharted territories! Cheers!

The first time I heard the term value trap I could not understand what it meant. I think I can now define one specific situation for a value trap: a good company with a deteriorating profitability driven by external forces with a good management destroying value because they are fighting with a plan against the odds with the hope that it will succeed. You see, I don't agree with that description. Because there are a number of cases where this has not been true and some I've invested in. Recent ones...Steak'n Shake was a good example...why is it that it turned around under Sardar, but not previous management? Apple...how did it go on to become the most valuable company in history when Jobs took over again? Frisch...the Golden Corral acquisition and expansion was just plain dumb and hurt the company...they came to their senses and sold the business, and the company is in better shape than ever. I think almost in virtually every case of a story I hear about a "value trap", it's because management made poor decisions or sat on their hands thinking they were invincible. Dell has been incredibly proactive trying to change their business model. Cheers!

Ok, let me rephrase - why do you think Dell will execute? I don't think they will, I think they are doing it...that was the reason why I changed my opinion of them. When I examined DELL a little over a year ago, I originally did not think they would be able to make the transition quickly enough. Then when the stock tanked a few weeks ago, I re-examined the business and where their revenues were actually coming from...it looks like they are transitioning fine. Maybe not as fast as the markets would like, but they are generating more revenue from non-consumer related services and products. The more recurring income they generate from those services, the more consistent their future cash flows will become. The more contracts they hold, the stronger the moat gets. There are no guarantees, but I'm betting that like Microsoft, they manage to squeeze more years out in cash flow than the market expects them to. Cheers!

Why is Dell not a value trap? No such thing as a "value trap." There is execution and no execution. Cash flow or no cash flow. Net equity or deficit. The word "value trap" came into existence for a way for investment managers to excuse a mistake or for paying too much. At some price, Apple pre-Jobs was an opportunity, as the business eventually executed under his watch. It was never a "value trap". It was poor execution that brought it down, and it was fine execution that restored its lustre. At any time, any company can lose focus and start on a downward slide that may or may never be recovered. That's all it is. So Dell's future isn't exposed to the predisposition of Apple, Microsoft, IBM or anyone else. It's fate is ultimately decided by how the company executes every day going forward. Do they get better? Do they prolong their fate? Do they succumb quicker than anyone thought? The investor has to decide that based on qualitative factors, and then they have to decide if future cash flows or equity are adequate quantitatively. It's why investing is as much art as science. No such thing as a value trap. Cheers!

I see the current pessimisim around DELL to be nearly identical to the pessimism around Microsoft a couple of years ago. They may not be the companies they once were, and they may not be better 5-10 years out, but they trade or traded in the territory of deep value based on existing cash flows and their balance sheets. DELL will be trading for significantly higher than it presently trades 2-3 years out. Cheers!

Chuck's obituary: http://www.legacy.com/obituaries/sfgate/obituary.aspx?pid=159336303#fbLoggedOut He was a jazz aficionado and philanthropist. Cheers!

Some short ideas: Einhorn has some detailed presentations on JOE and GMCR. (I am short both.) At GMCR there may be some fraud going on. JOE is a bet against Californian real estate. But it's more than that. If Joe has sold off all its best land first, then what's left isn't very good. If Einhorn is shorting JOE as a bet against Californian real estate, then he's going to be very surprised...I believe all of JOE's real estate is in Florida. ;D Cheers!

Yup, this was the interview. Something to the effect, these women have big lungs, and so they have big chests and can dive for long periods to put a grain of sand in the oyster. Cheers! Big-lunged, au naturelle women! Maybe I'll start an oyster farm. :o Cheers! Interestingly, the women have big lungs because they dive for pearls not vice versa. In the beginning the men dove for pearls and the women helped. Then it was discovered that the women had greater capacity to tolerate the cold water because of their extra body fat, so the roles reversed. In the early days the women dove pretty much au naturelle in the Japanese fashion. :)

While I wouldn't want to see a full-stop, but a slowing China...could it actually be good for the rest of the world? Lower commodity prices, lower-priced finished goods for consumers as inventories stack up, continued repatriation of manufacturing to the United States...could it actually prove to be beneficial? Cheers! http://www.cnbc.com/id/48773431

I think it was both...Mohnish's mic and Guy's speaker...as there was a delay in the echo. It was funny to watch them fiddle with it, especially when Guy went right up to the screen. Great presentation by two very good speakers...both could be professors! Cheers!

Yup, this was the interview. Something to the effect, these women have big lungs, and so they have big chests and can dive for long periods to put a grain of sand in the oyster. Cheers!

I love Irving continually bluntly telling Tom (his son) that "There's five guys waiting to ask questions...give them all a chance!" And then Tom laughing and obliging like a good son. Good interview! Cheers!

Just finished...terrific presentation! Even the technical difficulties were fun. I encourage boardmembers to listen to it. Cheers!

Here is a presentation Mohnish and Guy did for students at UC Davis last night. Enjoy! Cheers!

Couldn't it be that corporations are waiting for the impending win8 release before they upgrade their machines? Along the same line, I wouldn't buy a iphone 4S now knowing that iphone 5 is coming out next month. I doubt it. Unlike consumers, the enterprise goes through a long cycle of evaluation, testing, planning for a new rollout. Most major rollouts will be at least a year after the initial release. Unlike consumers who eagerly await new versions, upgrade is a pain for the enterprise. I think you're both correct. It is a pain for enterprise users, but at the same time, they don't want to have to run through the whole thing again, so they will plan their upgrades around new releases. By the way, I'm waiting for the iPhone 5, but if the screen isn't somewhat bigger, I won't be buying it. Cheers!

Bloomberg article on Chuck's passing. I didn't realize he was from Vancouver! Cheers! http://www.bloomberg.com/news/2012-08-22/huggins-who-built-candy-business-for-buffett-dies-at-87.html?cmpid=yhoo

I'm not too keen on the company's plan to expand widely relatively quickly. You diminish the brand a bit that way, especially in a highly competitive and somewhat localized industry. I remember speaking to Chuck in the past, and he said it was incredibly important to See's to maintain the quality of their chocolates from location to location. You add days to delivery and that reduces the quality. You then have to open more and more factories or warehouses, and that adds business risk. The industry is very fractured from city to city. There is always a hometown favorite that is dominant, and has significant history and nostalgia behind the brand. So See's had deliberately chosen to grow slowly, allowing the brand to organically enter other markets as residents in those regions became more and more familiar to the brand by visiting stores just outside their area. It's why I will drive two hours to Seattle to buy chocolates at Christmas instead of buying boxes at hometown favorites Purdy's or Rogers Chocolates. You plop one down in Miami and it just isn't going to do that well. Cheers!

Chuck Huggins, CEO of See's Candies, has passed away at the age of 87. I met and spoke to Chuck and his wife a few times in Omaha at Andy's party. He was as gracious and humble a person you will ever meet. He was always more than happy to engage any Berkshire shareholder and discuss See's and the chocolate industry. All the best to his family and everyone at See's! Cheers! http://www.bizjournals.com/sanfrancisco/blog/2012/08/chuck-huggins-obit-sees-buffett-munger.html?ana=yfcpc

That was quite funny! No, I don't think I want to fly with them...it would be a fun trip until we died in the crash. Cheers!

Hi Meiroy, that's what I thought happened. That's why I posted the CNBC article because it didn't quite make sense to me. Cheers!