Parsad

I disagree with this statement, you are making a ton of assumptions about what will or won't happen between now and expiration. Anything can happen and will there for IMO anytime you at the mercy of time you are introducing risk. I don't disagree with the overall BAC thesis, I own warrants, common, and 2014 $10 calls. But I would never say that the warrants aren't all that risky. I think you are correct on that. Mohnish says that the warrants have a 7-8 year life...whereas equity has a 100-year life. Anything is possible in that 7-8 years period...good or bad. Cheers!

Article on Japan and its debt load. http://www.theglobeandmail.com/globe-investor/land-of-the-rising-sum-japans-toxic-mountain-of-debt/article2372141/ Unfortunately, the Japanese population's psychology to any investment other than Japanese bonds is preventing the repricing referred to in the article, but at some point, you will get an unwinding and it will not be pretty. I would guess that at some point Japan is going to go through a massive devaluation of their currency and the population will be hit hard by inflation. Cheers!

The U.S. government will be releasing confidential census data for the 1930's on April 2nd. Cheers! http://news.yahoo.com/census-documenting-great-depression-released-151755443.html

Al, I think you called it. $9.88 after hours -- I think we can round that up to $10. Where is it headed by next weekend? I said tangible book by Christmas, but you turkeys seem to be nailing the increases on the head. Ok Al, when do you think it will now hit tangible book...so say around $12.50? Eric? Cheers!

11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. That's pretty funny, because we had a shitload of MSFT call options too! More than we had in BAC or Wells...10% of the fund was in MSFT call options...and we bought them when MSFT was around $24.50 at a $20 strike! Unfortunately, in my infinite wisdom of averaging in and averaging out, we averaged out of alot of the MSFT call options over the last four months. That's the problem with no lockup...you're always making sure you mitigate risk and maintain adequate liquidity! If I had kept all of the MSFT options, we would be having the best quarter in our history...still a damn good quarter...but it would have been a blowout on par or better than Berkowitz's! And that's with OSTK being a real dog still and 40% cash in both funds. Our director Glen Rollins gave me a quote by Peter Lynch when I lamented this fact..."Make sure you don't cut the flowers and water the weeds!" Cheers! parsad, im interested in hearing your take of OSTK. what is the investment rationale there? congrats on the financial bets I'll just lay it out in one long paragraph...I just think the business is cheap...they have a decent model and could offer other services to their demographic (primarily 35-55)...core base of about 25M annual customers...$1.1 B in sales, so they realistically should be able to achieve a minimum of 1.5% net profit margin on that...they should be able to grow at a minimum of 12-15% a year for the next 10 years...not much debt...their closest competitor sold for 7 times their current valuation...CEO takes almost zero compensation...board owns 35% of the company...Fairfax owns another 15%...Chou Funds own 15%...our board and funds own 3.5%...so you have a tightly held group of shareholders...there are a handful of other, smaller things as well...customer service is great for online retailers...partnership agreements with Travelocity, etc...flexibility management gives to executives (could be good or bad). The main problem is they blow too much company on expenses (corporate, legal, technology) and not enough on driving traffic to the site. The CEO needs to focus on the business and less on his legal battles and blog. They need a true marketing expert...which they have hired and should be announced pretty soon. Cheers!

Oh yeah sorry, he works with only one analyst...himself! He and his administrative assistant, Jing, look after $1.2B. He started as a worker at Bell, where he grew a investment club fund of $50,000 to $1M over five years. It was then converted to the Chou Funds after he got his CFA. Fairfax has funds invested in the Chou Funds. Cheers! 50k into 1m in 5 years? Was he using options or some other kind of investment that wasn't more then just common stock? Was there large additions into the club fund that helped toward the 1m? Only asking bc my mouth dropped in awe after reading your statement. Let me clarify that. I was describing the fact that he grew the assets to $1M before converting it to the Chou Funds. There was capital also contributed by the club members over the years. I believe the actual investment return was something like 50% annualized though, excluding capital contributions. Not sure what he was doing, but certain it was heavily concentrated and possibly leveraged. Feel free to ask him at the AGM or dinner this year. Cheers!

Francis is the kindest person I know in the financial industry, and that says alot because I know Prem, Mohnish and Tim McElvaine, and they are also some of the most generous people I know. But Francis is unique...very unique! If I were a captain in the investment industry, he is who you hire to be your right hand man. His honesty is beyond reproach! And he will never take credit for anything. Has anyone ever heard from Francis that the CDS idea was his? Nope! You heard it from Brian Bradstreet. We all know how talented the team is at Hamblin-Watsa, but all those principals there hold Francis in very high regard. That should tell you something. Everyone else can have Sprott, I'll take Francis. Cheers! so Prem's CDS idea was Chou's? thats interesting b/c prem is known as a macro guy, and chou value. does Chou make macro calls? They were in a Hamblin-Watsa investment meeting back in late 2004 or early 2005, and Prem was asking the team for investment ideas. Things were over valued and no one had a compelling idea. Brian and Francis had previously discussed CDS' and no one was throwing any ideas out, so they looked at each other and then said to Prem...there's these credit default swaps! Actually Francis did try to buy CDS' for the Chou Funds, but had to get regulatory approval as they are mutual funds. He got approval after a few months, but prices had started to move up already. Not exactly clear on why he likes RSH, but it is distressed and cash flows are good. Cheers!

Oh yeah sorry, he works with only one analyst...himself! He and his administrative assistant, Jing, look after $1.2B. He started as a worker at Bell, where he grew a investment club fund of $50,000 to $1M over five years. It was then converted to the Chou Funds after he got his CFA. Fairfax has funds invested in the Chou Funds. Cheers!

Francis is the kindest person I know in the financial industry, and that says alot because I know Prem, Mohnish and Tim McElvaine, and they are also some of the most generous people I know. But Francis is unique...very unique! If I were a captain in the investment industry, he is who you hire to be your right hand man. His honesty is beyond reproach! And he will never take credit for anything. Has anyone ever heard from Francis that the CDS idea was his? Nope! You heard it from Brian Bradstreet. We all know how talented the team is at Hamblin-Watsa, but all those principals there hold Francis in very high regard. That should tell you something. Everyone else can have Sprott, I'll take Francis. Cheers!

11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. That's pretty funny, because we had a shitload of MSFT call options too! More than we had in BAC or Wells...10% of the fund was in MSFT call options...and we bought them when MSFT was around $24.50 at a $20 strike! Unfortunately, in my infinite wisdom of averaging in and averaging out, we averaged out of alot of the MSFT call options over the last four months. That's the problem with no lockup...you're always making sure you mitigate risk and maintain adequate liquidity! If I had kept all of the MSFT options, we would be having the best quarter in our history...still a damn good quarter...but it would have been a blowout on par or better than Berkowitz's! And that's with OSTK being a real dog still and 40% cash in both funds. Our director Glen Rollins gave me a quote by Peter Lynch when I lamented this fact..."Make sure you don't cut the flowers and water the weeds!" Cheers!

Both are very good managers. You have to be willing to trust them and allow them to work though. Alot of Fairholme investors bailed, many near the bottom, because they didn't trust Berkowitz's judgement and analysis. My family knows if I die tomorrow, then put half of our money with Francis. I know him. I trust him more than anyone else in this industry. Prem trusts him intimately. When people talk about managers who would fit in at Berkshire or Hamblin-Watsa, without a doubt I would put Francis on that list...skill, honesty, ethics, and love for what he does...if he applied to Buffett, he would be hired on the spot. I'm also running a fund today because of his friendship and support, and because he's a great role model for any fund manager! His results can be a little more volatile than what you may like. His behavior with his fund is more straight forward, Ben Graham, value investments rather than just contrarian. He buys because things are cheap, like Buffett, and doesn't worry about the world ending tomorrow or a Depression that people may fear is coming. He doesn't use leverage. He's refunded parts of his management fees in years he wasn't happy with his results. And finally, to quote Good Will Hunting, "My boy's wicked smart!" Cheers!

We put 20% of the funds into BAC, WFC and AIG. We had 5% in BAC equity, 5% in BAC warrants, 7% in WFC, and 3% in AIG warrants. We do not have a lockup, so those were very large positions for us in a specific industry...financials...not to mention we already own Fairfax and Berkshire. If we had lockups, I would have put 20% into BAC alone when it was below $6. Unlike other funds, our partners can pull capital with 60 days notice, so we cannot do what you might do in your own personal account or a fund that has lockups. We sold the AIG warrants as BAC and WFC moved up, because we like the CEO's of those two companies a hell of a lot more, and we like the fact that BAC is simplifying their business back to the basics. We haven't sold a single share of BAC or WFC, or the BAC warrants. We have started to add very small amounts of out of the money puts on BAC, and we'll continue to do that as the stock continues to move to tangible book and then book value. Cheers!

Ok, enough's enough, so I don't want Harry's name mentioned on this board again. He's a big enough boy to give out the medicine, but not take it, and I don't want to keep deleting posts that he tells me are slanderous...like he just did! His account has been deleted, and he will not be posting on here anymore. Enjoy your life on Seeking Alpha Harry, and we look forward to your conquests! Cheers!

I would prefer that, but unfortunately there are quite a few professional managers on here that would not be comfortable with that. C'est la vie! Cheers!

I'm all for it Harry. That's what I like to hear. Cheers!

Article on the compensation of Berkshire and JP Morgan lieutenants. Cheers! http://www.bloomberg.com/news/2012-03-16/buffett-awards-wall-street-sized-pay-praised-by-dimon.html

Walmart is selling their iPads early! Better line up if you want one. Cheers! http://www.bloomberg.com/news/2012-03-15/wal-mart-to-start-selling-ipads-at-midnight-before-apple-stores.html

One such distortion is the damage done to net interest margin for banking. Killing ROE for all kinds of companies, like AIG for example. At the same time it's boosting companies who are borrowing at low rates. I'm looking forward to BAC's net interest margin improving over time. Yup. Very good example. It's going to kill off a bunch of life insurance companies too if it goes on too long! Just like in Japan. Cheers!

You treat people with contempt, as if they are your inferior and could never comprehend your genius. You came off that way in your phone calls with me as well, thus I've never entertained another one. I had not responded to any of your recent posts until you took a shot at Dorsia. So yeah, I'm pretty ornery and disrespectful to people who behave that way to others. If I remember correctly, you had some questions about the birth of high frequency, which I tried to answer. If my answers were in any way upsetting, I publicly apologize to you. I've never publicly or privately called you names, and I have nothing against you. I just think that the idea of finding companies which suffer from neglect, rather than controversy, has currency. And I think Kaizen will increasingly be applied to investment management. Those are my two points. If you disagree, no problem, I'm ok with that. I'm not going to drag you through the mud because you disagree with me. I appreciate and respect objective, principled disagreement. Ah no, you actually don't remember do you. In one call, you told me how you thought Sardar was a prick because he stole one of your ideas...I believe Fremont Michigan...you had sent him a white paper on it. The other call, you asked if it was possible to set up an introduction to Prem for you or any other people I may know, because you had a great idea that needed a couple of hundred million. I said that I don't do that for anyone. I've never initiated a single call to you and I would never, ever ask about HFT. I don't believe in it and I think it creates distortions in the markets. I'm not going to respond to anymore of the posts on this thread, because I don't enjoy this. You choose how you want to interact with people. Cheers!

If and when ECRI's call (http://www.businesscycle.com/news_events/news_details/5065) materializes, it will be interesting to see what bullets we try to conjure up - Dalio's interview back in October at the Economist's Buttonwood conference seemed to indicate the next downturn may not be pretty.... There truly isn't much left that would assist the economy and not cause any future problems. QE3 would create problems going forward. I think we'll have a better idea of how things are as the housing inventory shrinks. If prices don't start to rebound, and unemployment doesn't rebound, then it could be a slow slog. So far, things look quite positive, but China is slowing and we will have to wait and see exactly how they stop the hard landing. Cheers! Someone said today that it will be interesting to look back in ten years at the fact that Apple's market cap is greater than the entire US retail sector. I think the same can be said (not a new revelation whatsoever, I'm just saying) for Bernanke's ZIRP. I'm not nearly smart enough to figure out what he is distorting, but there has to be some type of distortion building up in the system right now that will materialize within the next ten years. I'm not particularly anxious to find out.... I agree. I think what they have done so far is manageable and can be unwound, but the longer it goes, the more you artificially manipulate the system, the greater the distortions you create...and there truly is no way for them to know or anyone else to figure out. Just so much money has flooded the system, and you still have a very weak economy. It could slow down further, or it could rev up and become difficult to control. Either way, the balance is incredibly tricky! Cheers!

You treat people with contempt, as if they are your inferior and could never comprehend your genius. You came off that way in your phone calls with me as well, thus I've never entertained another one. I had not responded to any of your recent posts until you took a shot at Dorsia. So yeah, I'm pretty ornery and disrespectful to people who behave that way to others.

Then post your analysis, instead of showing up once every 6 months to take a shot at boardmembers because one idea worked out for you. Don't delete your old posts. Deal with everyone with a touch of humility. Cheers!

If and when ECRI's call (http://www.businesscycle.com/news_events/news_details/5065) materializes, it will be interesting to see what bullets we try to conjure up - Dalio's interview back in October at the Economist's Buttonwood conference seemed to indicate the next downturn may not be pretty.... There truly isn't much left that would assist the economy and not cause any future problems. QE3 would create problems going forward. I think we'll have a better idea of how things are as the housing inventory shrinks. If prices don't start to rebound, and unemployment doesn't rebound, then it could be a slow slog. So far, things look quite positive, but China is slowing and we will have to wait and see exactly how they stop the hard landing. Cheers!

He,he...Harry you're so funny! Thanks I needed that. I think everyone on this board needed that today! See you can contribute in positive ways that give all of us a good laugh. Way to go buddy!

Someone messaged me a few months ago, and I forgot who it was, but everytime "Munger" shows up on the board...just go long! ;D I suppose absence makes the heart grow fonder. Regardless, while I think the U.S. will do better than just about every other economy in the world going forward, we are now officially out of bullets. So it's either this thing gets its legs going and GDP starts revving, or we go through a continued slow, slog of deleveraging for another 3-5 years. Cheers!