Parsad

The meeting itself and Prem's Q&A is over by about noon. But then there is a cocktail party in the lobby for about another hour. So everything is officially done by 1pm. You can then come over to the Pickering/Green Rooms where MPIC Funds is doing their AGM! ;D Cheers!

I think BAC's return on equity will be better than 10% after 2-3 years. Why? Because much of their earnings will be driven by a recovering housing market. There is every reason to believe that once BAC gets their litigation issues out of the way, and their operating costs down to very efficient levels, they would entertain a price not much less than Wells Fargo relative to book. - Moynihan's model for BAC over the next five years is to copy the culture and customer-centric focus of Wells. - They have the deposit base and the mortgage business. - They also have a much more complete investment business than Wells. - The credit quality of their portfolio is improving every quarter. - Their operating efficiency should be on par with Wells over time. When you have a CEO who truly puts his compensation aside to do the right thing for the business, you start to develop a culture that will permeate the ranks over time. Compare Moynihan's compensation to Vikram Pandit's. Look at what Moynihan had to work with and turnaround and look what Pundit had to work with...then compare their compensation. That changes the way employees behave when the CEO does the stuff that no one else is willing to do. I'm very keen on BAC, because I'm very keen on Moynihan...he's the intangible asset in the valuation that you guys aren't including in your calculations! Cheers!

I think it is very likely they would increase the dividend in 2013, depending on how some of their settlements on litigation go. At present, and I can't see anything changing through the rest of this year, how their loan loss provisions would be off by a whole lot, nor do I think there is any significant reason why they would have to raise alot of capital. They have enough cash flow presently to raise the dividend, but it is really whether the government will feel comfortable with them doing that. I can't really see why they could not pay a 4-5 cent per quarter dividend now or in the next year. And I think they could easily manage a 10 cent per quarter dividend in 2014-2015. Cheers!

That's the conservative estimate based on the status quo for the U.S. economy. If things deteriorate, the intrinsic value will continue to increase, but price may lag. Like I said, tangible book by Christmas and book by mid-2014. Cheers!

No worries Ben. I think $10b now is prob unlikely I am trying to get more info to get a #. What denominations do CDSs come in? Bc if they come in $100k units of $1m, we would know he at least made $65,-$650m Why are you consistently shooting first and asking basic questions later? It's like you're trying to create a National Examiner or US Weekly of finance. By the way Jacob, be careful in what you state in your story titles. A very good example is what the title in the NY Times article on Fairfax said: Fairfax Financial's $400 Million Tax Break, Revisited And what your title discussing the article said: Prem Watsa And Fairfax May Owe $400 Million After Improper Tax Returns The NY Times is saying that there MAY have been impropriety. You are saying there WAS impropriety. That little difference can be the difference between ignoring an article and being sued for an article. As your readership increases, there is more and more such risk if you aren't careful. Cheers!

I would be very very happy with that outcome. Anyone paying $13 per share today would make 15% annualized until FYE 2014 under that scenario. I paid a hell of a lot less than $13! ;D Also, there is one thing missing from your analysis Bmi (which I think is pretty accurate)...close to $10B in expense reductions over the next 3 years, and Moynihan's new goals of driving earnings forward. So, your analysis is actually quite conservative...which is in line with what we estimated as well. I don't plan on holding BAC or Wells for the next couple of years. I plan on holding both for many years, reaping fat dividends from them over time. Cheers!

NY Times article on bank stress test results to be released by Thursday. Cheers! http://www.nytimes.com/2012/03/12/business/new-stress-tests-expected-to-show-progress-at-most-banks.html?partner=yahoofinance

Article on Chesapeake and gas prices. Cheers! http://www.bloomberg.com/news/2012-03-12/chesapeake-ceo-courts-asians-for-100-billion-resource-energy.html

Your numbers don't sound right to me. We'll know what he made after costs eventually. Cheers!

Article on possible frontrunning of Starbucks and Green Mountains. Cheers! http://www.reuters.com/article/2012/03/09/greenmountain-options-idUSL2E8E9EC420120309

Here's a pretty good group of charts showing a few different ratios for various financial institutions and their stock price. You can pretty easily see that the only thing holding BAC's stock price back is fear over the overhanging lawsuits and continued doubts about loan loss provisions. The current price has no real fundamental reason to be where it is based on the balance sheet. Cheers! http://www.forbes.com/sites/ycharts/2012/03/10/bank-capital-tangible-common-equity-vs-wishful-thinking-ratios/

Gretchen's cronies are trying to drum up some unflattering articles now they have been dismissed. Cheers!

It always amuses me what assumptions people outside the industry make about it. If you really want to understand why Apple does what it does, you'll have to spend a lot of time understanding how tech cycles work and what good design really is. The mistake most people make is two look at two products with similar specs and assume they are the same. A BMW can similar 4 wheels, 5 seats, a steering wheel and engine power as a Hyndai coupe but people pay different amounts for the two cars. The value proposition of the two cars is completely different. In this particular example, one car allows you to display your status to the world, the other one doesn't. For people who are in the industry and assume that no one else recognizes what is happening, it's funny how you haven't recognized the shrinking margin of difference between Hyundai and BMW. In less than another decade, it won't be about status anymore...only about who has the better product. I don't think anyone thought that Hyundai would supplant Toyota and Honda a decade ago. How many of you drooled over the story of Toyota and their leadership...the Toyota Way...guess what? Hyundai came along! Why release the product every year then? Because they don't want competitors to have a lead in specs. There are new, more powerful chips being released every year. The new iPad has a quad core process, double the memory, the resolution, a camera is 5 times more powerful and many more improvements. This is a highly competitive business and is in the land grab phase. You want to put pressure on your competitors and increase your lead. Why would you wait? That would be lazy and irresponsible. Why would Apple limit themselves to selling a dual core processor for the next year when they are ready with quad core processor? They are many users who bought an iPad 1 who are ready to upgrade. Why would Apple make them wait for another year? It doesn't make sense to wait. My remark on this question was a rhetorical one, as DCG said why should every generation be a game changer. My point was that if you aren't creating game changers than you are falling a step behind...look at RIMM. They have some of the best engineers in the world...comparable to Google, Apple, Microsoft, etc...they are done! Took all of four years! You keep saying this, but have no proof of this. There is of course a chance the margin of separation will decrease in the future, but the iPhone 4S and iPad 3 don't indicate this has started to happen (which is what you are trying to argue). Again, you don't seem to have a very strong understanding of apple and technology product life lifecycles. Read a few books on apple. I have...and Microsoft...and Google...and Toyota...and on engineering. Ten years ago, no one thought Microsoft would be clobbered by Google and Apple...while still under Ballmer's watch and Bill Gates watching from the side. The technology lifecycle moves 3 times as fast the average non-technology product cycle. Also, Prasad, you seem to believe that Apple sells the same products as its competitors, just with better marketing. On the 10 year anniversary of its retail stores, Apple put out a poster. Below is the content of that poster. Read it and let me know which of its competitors is catching up with its retail experience. Who was responsible for those 10 years? Would you say the same thing about Berkshire? Clearly, none of his successors will have the skills he does. Yes, other than Ajit Jain in insurance. The culture will be different. Not immediately but over time. Different leaders will leave different marks. Do you truly believe Howard Buffett and Bill Gates, along with Todd Combs, Ted Weschler and whoever is CEO (assume it is Matt Rose) is going to be as effective as Buffett? Carry the same weight...respect from the subsidiary managers...the same passion for Berkshire? C'mon! Berkshire will do better longer without Buffett, than Apple without Jobs. Both will continue to lead for some time, but their advantages over their competitors will dissipate over time. If not simply from a change in leadership and passion, then due to the sheer size of their enterprises. As I said, you can choose to agree or disagree with me...or not even care one way or the other. Only hindsight will tell us what happens. Cheers!

Another terrific letter! Alot of good information. No comments for you Fibrek shareholders. You'll have to wait to the AGM to ask him anything. Cheers!

Why does every iteration of a product have to be a game changer though? This is the third generation of the iPad, and there has yet to be a competitor to come out with a tablet that even rivals the original iPad. The iPad itself was a game changer, and it's only been out a couple years. Now they have to continually improve it to make sure it remains the best tablet available, which they've accomplished so far. Why release the product every year then? Anyone who thinks Jobs wasn't putting out products on an annual basis to hype it through marketing, has no clue what Jobs was trying to achieve. He not only wanted his product to be above average, but innovative and a product that people could not live without...be it because of technology or be it because everyone would simply want one. And then he would charge twice as much as anyone else, and rational people would still pay it. Apples's products aren't technologically advanced relative to their peers. Where they are better than their peers is their ability to make technology as painless as possible...even enjoyable. Jobs could sell you your own car for twice what you paid! They sold 40M iPhone 4GS' because their competitors still haven't gotten to the point where their software is intuitive enough. This iPad will also sell a ton simply because the product is so easy to use. But the margin of separation will continue to decrease between Apple and their peers, and that's because the founder is no longer there and technology changes so much faster than any other industry. Apple today isn't Walmart after Sam Walton, and only hindsight will prove that observation right or wrong. Cheers!

It seems as though this young fella who wrote the article mentions everyone except Fairfax! What the hell do I run this board for then? Geez! ;D Cheers! http://stocks.investopedia.com/stock-analysis/2012/A-Look-At-The-Baby-Berkshires-BRK.A-MKL-L-BAM0309.aspx#axzz1of6IsjIl

Naturally the source of the article is from "unnamed sources", but I would suspect that most of the details are about accurate. Banks will pay higher dividends, but maybe not just as high as everyone expects. They are still very cheap and have very good balance sheets, so I'm not sure why everyone worries so much. Everyone should be simply happy that the Fed is erring on the side of caution, rather than what happened during the housing bubble. Cheers! http://www.bloomberg.com/news/2012-03-09/fed-said-to-balk-at-banks-dividend-plans-amid-higher-loan-loss-estimates.html?cmpid=yhoo

The total at risk on the credit default swaps is something like $3.2B according to something I read, so I don't think it would pose a significant issue. What it does is set the precedent for any future restructuring, and a more significant bailout (Italy) comes to mind, could pose a systemic risk depending on counterparty liability. Cheers!

I don't think natural gas has bottomed yet. It will go even lower. There is just so much production and money being put into fracking. I thought it had bottomed a couple of years ago and I was wrong. Sometimes things get extraordinarily cheap and I think the players in this industry are going to get hit as their hedges come off. Usually the analysts are optimistic as you start to get cheaper and cheaper, and then some of them start throwing in the towel when they find they were wrong...that's when you know to buy. Right now people think it is cheap, but it will probably get cheaper. Cheers! Wouldn't you expect consumption to shift to nat gas as the differential with oil keeps rising? Any idea how fast it is possible to shift consumption? I would think that transition already began, but will take another year or two to really start to make any sort of dent in supply. Just far too much production, and it isn't really so much as a glut, but a complete structural change due to the way gas can be produced and they are getting even more efficient in their methods. But the price and oversupply is a good thing. Any changes that can be made in the way North American's rely on foreign energy, the better for our own national security and independence. Cheers!

I always thought they had both a 13" and 15" Macbook Air. They don't have a 15" one? Cheers!

I thought I would just see what expectations were like and how people reacted to the first product presentation apres the Steve Jobs era. I thought they made standard improvements, but nothing gamechanging, and this is unfortunately what I think life will be like after Jobs. Just no one to dream and push the team to almost unimagineable levels. Cheers!

I don't think natural gas has bottomed yet. It will go even lower. There is just so much production and money being put into fracking. I thought it had bottomed a couple of years ago and I was wrong. Sometimes things get extraordinarily cheap and I think the players in this industry are going to get hit as their hedges come off. Usually the analysts are optimistic as you start to get cheaper and cheaper, and then some of them start throwing in the towel when they find they were wrong...that's when you know to buy. Right now people think it is cheap, but it will probably get cheaper. Cheers!

Looking a little better than last week. Cheers! http://www.bloomberg.com/news/2012-03-08/north-american-rail-freight-carloads-for-march-3-table-.html?cmpid=yhoo

We haven't bought anything yet, but I've been digging around trying to find out what is the best way to take advantage of this. The actual natural gas companies haven't been discounted enough...hopefully they will soon as their hedges run out. Cheers!

Excellent article on Li-Ka Shing. Cheers! http://www.theglobeandmail.com/globe-investor/investment-ideas/where-asias-richest-man-is-putting-his-money-now/article2361681/page1/