Parsad

Hard to slow a bull's momentum! Not going to end well. Cheers! http://www.bloomberg.com/news/2011-07-14/china-to-intensify-housing-curbs-in-smaller-cities-as-price-gains-quicken.html

I would boldly suggest there is a greater than 5-10% chance that they do not raise the debt limit as soon as many people think. I would even suggest that number is closer to 30%. People will often do the most absurd things to make a point. Even if that means the outcome is far more costly than to concede. Cheers!

Article in the Omaha World-Herald about the lady selling Buffett's childhood home: http://www.omaha.com/article/20110615/NEWS01/706159915 I've read a private email she sent someone regarding the home, and I can tell you that she definitely is sincere and is huge fan herself that it was the home that Buffett grew up in. She hopes that whoever buys it also cherishes and relishes that fact. Cheers!

Exactly as Max described. So whenever the high watermark is reached, that is where the compounding continues from. So any new investor coming in when the fund is down to $14/unit, would have the benefit of the high watermark being at $15, as well as the 6% annualized compounding from $15. I think it's the most equitable way to compensate the manager...if you don't perform, you don't eat...and the greater you outperform, the more you make. This forces the manager to minimize losses (as you don't want to be underwater long), and make bigger bets when they believe it is more advantageous. Cheers!

I would assume the 6% annualize mean if your fund is above $11.91 per unit you get to charge a fee ($11.91 = $10 * 1.06 * 1.06 * 1.06) Or does the annualize mean it has to be higher than $15 * 1.06 = $15.9 (which the fund is not) so no fee Make sure in the agreement. The LP Agreement is the end all of the fee structure and is the equivalent of a legal contract. Different funds have different rules. Our fund operates the same as Mohnish's. Every time the fund is valued (in our case monthly, but some are quarterly, etc), if the fund reaches a new high then that becomes the new high watermark, and the fund has to achieve the equivalent of 6% annualized before any incentive fee is paid. another stupid question. what about new money that comes in? if your fund its at $14 per unit (via the example) and new money come in at $14. what is the high water mark for new money? is it $14 or $15? Our fund operates only on an incentive fee. There is no set management fee like many other funds. Again, you need to clarify how the incentive allocation is calculated with the fund manager, and you should probably get it in writing if it isn't clear from the LP Agreement. With our fund, if the fund is below the high watermark, no incentive fee is paid at all until all the partners, old and new included, are made whole and then their 6% annualized return is also achieved. The general partner doesn't receive any partnership income at the expense of the limited partners. This is something you really need to pay attention to. Alot of funds back in 2008 did not take incentive fees on old money because their fund was below their high watermark, but they did take incentive fees from all the new money they took in. In our opinion, this isn't fair as the markets rebounded significantly in 2009/2010, and these managers took healthy incentive fees while many of their older partners still had not been made whole. The Pabrai funds that you cite are unusual in that these, in the fashion of BG and WEB's funds, have not, I think, charged the usual about 1% or 2% annual management fee. Very few investment managers have been able to survive long term by waiving all but the performance fee. Tilson did this for a few years, and then changed terms to add the management fee. The S&P500 P/E 10 is currently 23+, above the long term mean of about 16. It will be difficult for any hedge fund to survive long term without an annual fee as the current PE 10 almost certainly will regress from the current record profit levels to a lower mean at reduced profit levels. This is true, but let's examine the reason why. I would bet that the majority of fund managers who don't last long-term, usually do so for two reasons: 1) Exorbitant operating expenses...they want the fund image to be like a typical Wall Street bank and a salary to boot! 2) Excessive risks...they decide they want to operate like a typical Wall Street hedge fund! You cannot survive long-term without running your fund as lean as possible, and you have to always do everything to avoid risks that could lead to permanent loss. We've managed five years on a shoe string budget, beaten the S&P500 handily, and mitigated investment risk. The way we've managed the fund, means that long-term isn't an issue for us at all...and we are tiny! If you don't survive long-term, it comes down to the two points above. Cheers!

I think the income will be retained in HOA Holdings. I don't think any of it will be trickling down, but they will benefit from their ownership in HOA. I thought Chanticleer would have gotten significantly more for their right of first refusal ($2-3M+), but it looks like they just got a seat on the board, and Chanticleer will be paid $100K a year for consulting. It looks like their only ownership is the $500K investment through Investors LLC. Maybe they'll shed more light on the subject in the next quarterly report. Cheers!

The risk is that Lou is getting older. But yes, accredited investors have access to one of the best investment managers in the last 100 years for 1%. Cheers!

For those interested in Lou Simpson's firm, here is some information: http://www.adviserinfo.sec.gov/(S(awk4xef4awanseq1huo25knh))/Iapd/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=88478 Cheers!

This was a classic "Short & Distort" campaign that should be used as a case study within exchange commission classrooms. Carson's errors in his Orient Paper analysis are so glaring (not even verifying he is commenting on the right subs) that I can only consider them extremely clumsy or purposeful. I side with later given his business model was to provide this report for "free" and make money by shorting. Now, with that background .... think about Sino. I agree Lessthan. That's why I found MW's conduct to be foul. But unfortunately the longer TRE takes to answer questions, the longer the stigma will stay attached to the company. Barely anyone wants to touch Orient, even though there was nothing wrong. They can file suit against MW, but what is the probability of a reasonable outcome, and how much would they have spent to fight the case. How many millions has Fairfax spent, and they are a much larger company? These guys have them by the nuts, and unfortunately there is little anyone can do about it. Cheers!

The only thing I would disagree with you about is them taking their sweet time because they have other clients. I maintain that if the client (the company) calls senior management at PWC and makes a fuss, they will be all over it. The fact that this hasn't happened isn't good. No, not necessarily. I see it all the time. A client has a crisis and they contact the auditors or accounting firm last minute. The firm tries to send out anyone they can spare, but that can be affected by seasonality of staffing, or even inability to outsource the work to contractors. The last thing partners actually want to do is the actual grunt work...they've paid their dues! ;D So, generally the project may be extended over time when it is something that isn't tax related or needs immediate filing with regulators. In this case, the audit firm needs to make sure they've done their due diligence before providing any report, thus they are going to take as much time as they need to affirm their data. And they definitely won't risk alienating any of their other clients who are in good standing and not at risk of being fraudulent. A further thought Sanjeev to your earlier point. If the gaps are simply due to carelessness and oversight, that obviously isn't good, but it isn't fraud. Honestly, at this point, the answer would be that someone senior enough would become the sacrificial lamb and be hung out to dry. They would say we are so sorry, we (management) did not exercise proper oversight and we are dedicating ourselves to putting proper procedures in place. We have gotten rid of the bad apple and this will never happen again. We will restate, as necessary, and we look forward to regaining your trust. That this hasn't happened is again a bad fact. I have no idea if this plays in at all, but in the Asian culture there is a lot of weight placed on face saving, pride and the like. It is not a culture that likes to admit they are wrong. All of these things could be weighing on the ultimate resolution of the issue. You are correct here. There still may be a sacrificial lamb, and I suspect that the company really isn't fraudulent, but just truly horrible at maintaining records and oversight. Whether people like it or not, there is definitely a cultural aspect to this...titles are received by paying off officials, regulatory oversight is minimal or non-existent, inter-company transactions are nebulous, and lastly the usual trait of saving face! It's why we've never invested in Chinese companies. It's tough enough understanding and grasping accounting rules, legal ramifications, tax laws and property rights in your own country. How much more difficult is it to try and master it where there is a seismic shift in cultural differences? Cheers!

I do SOX control work for Alnesh's accounting firm. So we are involved in testing and setting up controls for various companies, from small junior exploration to TSX/dual-listed companies on larger boards. I pretty much do the same thing as the auditors do, and I can tell you for a fact that I could examine all their accounts & documents, find inconsistencies, and verify assets within two weeks...by myself! A week inspecting documents and a week travelling to inspect properties, inventory, etc. Maybe an extra week if the area is extremely remote and it would take a few extra days getting there. There is no reason this has to take months. Auditors just take their sweet time because they have so many other clients, and they expect to ramp up their billing for "at-risk" work such as this. Meaning, if our reputatation is on the line, we are going to bill the hell out of you, so even if we are wrong, we still get something out of this! Cheers!

Agree with what you are saying, but don't you think that because things are not so simple in China and that this company is spread fairly wide, that this is why the audit will take a while. Also & I may be wrong here, but wasn't their regular auditors E&Y and now PWC is doing this special audit? If someone accused me of the same thing, I would tell all of the analysts and regulators that my books are completely open. Please come and inspect them all and we will assist you in any manner. I wouldn't wait for the auditors to do a special audit. Either the cash is there or it isn't...show the bank and brokerage statements. Either the land titles and leases are there, or they aren't...show the documents. Why aren't all these documents in PDF on the server at head office. They should all be immediately accessible and not in some remote location. The land titles should have complete surveyable data. They should be spending thousands to take the analysts to the various locations where the bulk of the land assets are. This could be done very quickly and should not take months. This is poor administration and management. Auditors will take their sweet ass time doing all of this, and in the meantime, the company and shareholders suffer while eventually footing a bill for millions. Cheers!

Good post Kraven! You're correct. And unfortunately the longer the delay occurs, the worse it is for everyone involved. Really, they should have opened up their books entirely to squash this. The fact they didn't is either they realize there are gaps in their data, perhaps due to poor administration and oversight, or worse! This all plays into the hands of MW's. So if the company isn't fraudulent, but more careless than anything else, this is killing their reputation. If they are fraudulent, it will come out over time, but shareholders are biting their nails as they wait. Cheers!

It's actually a fantastic interview. Probably the best one I've heard with Buffett on CNBC. Great discussion on a bunch of subjects. Glad my thoughts are in line with the Oracles! Cheers!

As per Buffett's usual appearances with Becky Quick, a terrific interview with the Oracle. Cheers! http://www.cnbc.com/id/43671706?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

As Paul Tudor Jones once said, "The obvious trade is obviously wrong." I must be the only guy on this thread to make any money so far on MSFT ;D *ahem* It's been a good month. :) Moi aussi! ;D Cheers!

Why no love for Einhorn or Ackman? I love those guys. Smart guys, good investors, but they associate with some unsavory friends and their conduct is sometimes a bit unethical. Do not push Parsad to say more on this, he has nothing to gain and there is always the possibility that he has something to lose. Nope. I never hold back. My views on both have been the same since day one. If I had to pick the lesser of two evils, then it would be Ackman. Neither should be called "average investors" though, as both have excellent results. Cheers!

I don't like Einhorn, and I'm not particularly fond of Ackman, but the last thing I would describe all three as is as "average investors." They are anything but and their records show that. Cheers!

Also I invested with Berkowitz when he first started his fund and added money all the way up til now. I'm sure he'll bounce back at some point, but my gripe now is his involvement with Joe. It would be like if I hired him to manage my money in a mutual fund which he did great at. Then he decided to go off part time running a hard to operate business. Now I'm all confused. Is he going to be a hedge fund? Mutual fund? Property manager? I hired him to be a mutual fund manager! I stuck with him through 2008-2009 when his fund went from the low 30s to the mid teens. I knew what he was doing and I knew he was going through a rough time but he was concentrating on his mutual fund business and would come back. Now I've sold off about 75% and will put my money somewhere else for now. I have to agree with mrstockwells comments. I think that's kind of what my point is. You trusted him for some time, and he did very well for you, yet now you are second guessing his judgement after he's been involved in this venture for about six months. 10 years versus six months. It's why investors pull money at the bottom. Take a look at Mohnish's fund. He was down nearly 70%, yet one of my own partners, whose family had capital with Mohnish, were thinking of pulling. I told them that he didn't suddenly become stupid. That it will take time, but he has more vested than anyone else, and would probably make their money back. It may take some time, but he would most likely earn it back, and in the meantime he wasn't getting paid a cent. They stayed put and made their money back faster than I ever thought, or they thought! So Mohnish did poorly over a year and a half...in fact almost catastrophically...yet the "smart money" were all itching to pull out, forgetting about the first nine years of the fund. Many would have pulled out if the lock-up wasn't in place. They would have all shot themselves in the foot. The same thing happened in late 2009 with Francis' fund, and in the last couple of years it seems to be happening with Tim's fund as well. Am I saying that the majority of people are probably shooting themselves in the foot by pulling their money out of Fairholme, Chou Funds, Century Management, McElvaine, Berkshire, etc? Who knows and only time will tell. But my money is on "yes"! Cheers!

Another reason might be that @18B in assets, Berkowitz is making $180M a year come rain or shine??? He could make far more with a "1 & 20" compensation plan in a hedge fund. I think folks are too hard on this guy. He's done better than 99% of fund managers and investors since inception, and people are now thinking he's suddenly become retarded. In a couple of years when his bets have paid off, they'll think he's a genius again. I hear the same crap about Mohnish, Francis, Tim, etc. A couple of weeks ago there were posters saying what a dweeb Arne Van Den Berg was. Now it's Berkowitz. Next week it will be someone else! You'd think I'd be used to hearing all this junk! Cheers!

MySpace was losing market share, whereas Facebook is growing. Not only growing...it's the 800 lb. gorilla and will be very hard to displace. My friends and family who use Facebook are hooked...almost addicted. It will only be a natural transition to incorporate live video chat into there. Cheers!

A sense of loyalty to the investors who trusted him from day one? Also, possibly because this vehicle is available to all investors, whereas an investment fund would be limited to accredited investors only. Cheers!

Article by blogger on how the Skype acquisition is suddenly looking like a pretty smart move. Cheers! http://seekingalpha.com/article/278290-facebook-video-chat-how-do-microsoft-investors-feel-about-skype-acquisition-now?source=yahoo

Pff, Publisher: HarperCollins (October 1991) I guess that wins. Wow, almost right on the cut-off. Just made it I guess! ;D Cheers!

Have you looked at his first book, though? I'm in the middle of reading it for the first time after seeing it highly recommended by people like Geoff Gannon and other value bloggers, and there's no magic formula so far in that one. It's all about analyzing spinoffs and merger equity offerings and such. Definitely over the head of the average investor, which is why he's been trying to make it easier and easier with each book, but interesting stuff for most on this forum, I bet. You're talking about "You Can Be a Stock Market Genius", right? I thought it was dumbed down...sort of like Peter Lynch's "Beat the Street". Better than his two recent books, but I didn't really like it. Yah his first book is probably the best value book in the last 20 years. Not even close! Seth Klarman's "Margin of Safety" is hands-down the best investment book written in the last 20 years. Cheers!