Parsad

Short sellers aren't manipulating gods. They can't just put out some research and bankrupt a company over night. The company will run into problems if the research is true, but isn't that what's supposed to happen? If this logic were true in the stock market, then nobody would ever publish any research publicly. Someone gets a case wrong and that means they are wrong for the rest of there lives? I guess Dexter Shoes makes Buffett a terrible investor. I'm assuming your batting average is perfect. Did I say that all short-sellers were bad? I listed four names that have been involved in various coordinated short attacks, not a general blanket statement of all short-sellers. C'mon, how many vulnerable companies were driven out of business by short sellers? Really. Name one. And don't give me a crummy company that had their access to capital spiget turned off because of a short and went bankrupt. I don't want a name of a company that had problems, a short pointed them out, and then went belly up. They shouldn't of had problems, and they shouldn't have relied on the world just extending and pretending. The only time a short can even "cause" a bankruptcy is when they are a financial services firm/leveraged firm that needs access to capital to survive. I, too, challenge you to find me examples of a company that has gone belly up that shouldn't have in hindsight - that's a real company, something over $500 Million in market cap at peak. How about Fairfax? When the stock was hammered to $57, where exactly where they supposed to get financing once the spigets were turned off? Fairfax would not be around today if it wasn't for Cundill, Longleaf & Markel. Coordinated attacks happen all the time. Insider trading happens all the time. How about Dendreon? Their drug would not be around today. In regards to him marketing/selling his report before he published it, so what? If I had smoking gun evidence of a fraud of a multi billion dollar company I would absolutely want to make as much money as I could before showing the evidence to the world. Why is that bad? That's the industry we are in. The way Block was going to get paid was to sell his research. Releasing it on the internet once the sales were over is not in the least shady, nothing different than someone posting a report on seekingalpha after pumping their ideas in a newsletter the week before. It's up to the market how they want to interpret the report. Well, actually not true. He has a very large short position to begin with. He could have simply taken on institutional clients, rather than release his report early to those institutions. Would that have not been more ethical? If he released his report early to select funds, then why did he just not say so when contacted by the reporter? There is a certain sense of improrpriety in that behavior, and he chose not to disclose that. No one was asking for names, just if it was true or not. Cheers!

But Parsad, how do you reconcile the fact that the amount of frauds Hempton, and especially Greenberg, have reported on or taken negative stances on out number the amount of legitimate companies they mistakenly thought were frauds by a large factor? I just don't get how saying Hempton/Greenberg are involved lessons the likelihood of fraud. If they've uncovered more fraud than they've been wrong on, then if they're involved the odds of fraud go up right? Isn't that just basic math? There is 30 correct frauds for every Fairfax in Greenberg's career. Wouldn't the fact that their fraud batting average is well over .500% make the odds that Sino is a fraud higher? Isn't that like saying it's ok if a few innocent men receive the death penalty, since the bulk of them are guilty? There are two views on Hempton, Greenberg, Chanos, Cohen et al: 1) They use all their resources to uncover fraud, and they've done a good job at catching many. 2) They use all their resources to coordinate short attacks and drive vulnerable companies out of business. Take your pick. I believe there were many people who were also sympathetic to Hitler when he was alive. Time tells a different tale! Cheers!

Hempton was the analyst working for Platinum Asset Management in Sydney, Australia, that originally initiated much of the accounting stories around Fairfax. He contacted numerous people, including shareholders of Fairfax, telling them to sell their shares in the company. He was also showing up on message boards under aliases, including the old MSN BRK Message Board, and telling us about things that suddenly showed up the next day or week in articles, reports, etc. Hempton was also talking to John Gwynn, the Morgan Keegan analyst who wrote many negative reports on Fairfax, including the notorious $4B under-reserved calculation that was subsequently retracted. Gwynn was fired from Morgan Keegan after it was found he released his report early to Kynikos Associates and SAC Capital. Hempton was also one of the sources in articles regarding Fairfax that were written by Peter Eavis, Herb Greenberg and Fabrice Taylor. Deepcapture also covers John Hempton in a couple of their articles. You can find them on their website. Cheers! http://www.deepcapture.com/introducing-john-hempton-the-plunderer-from-down-under/ http://www.deepcapture.com/the-word-on-thestreetcom/

As I said before, I have no idea if TRE is a fraud or not, but there are a number of things that have occurred that strike me as particularly fishy. - The way the report was marketed to hedge fund before going public - The particular miscreants involved in some aspect or another (Herb Greenberg & John Hempton) - The tone of the report...much of it was assumptions about what the value of the assets would be if a trustee liquidated TRE after being found to be a fraud I'm waiting to see exactly which hedge funds were on the bandwagon. I would bet my life that we would be quite familiar with some of the names and personalities. Cheers! http://www.bloomberg.com/news/2011-06-07/muddy-waters-pre-marketed-sino-forest-report-to-hedge-funds-dundee-says.html

What's probably more important, is the character, conduct and integrity of men... Yup, and he's got that in spades! Cheers!

Article from Bloomberg: http://www.bloomberg.com/news/2011-06-07/ex-sac-capital-manager-tells-jury-he-traded-on-tips-18-times-1-.html Cheers!

1) Are Vancouver always that dirty/snide? Seems to be a lot going on – I know that Boston are a big team (and the farm team they have only seems to recruit big players) so is it a case of not being able to match Boston physically so play dirty to wind them up? Nope. But they will get dirty with the dirty teams. Don't let Boston's soft exterior fool you. They are probably one of the dirtiest teams in the league. The Vancouver-Nashville series was one of the cleanest and most respectful series you will see. Nashville plays clean. 2) Chara – obviously highly rated but to me he’s not agile enough in tight turns and even a bit slow. Seems to always be around when the puck gets turned over and its normally because someone has out witted him on the ice.. Does his size outweigh the deficiencies in his game? Correct. Great reach and sees the game well, but as slow as he is strong. Canucks played down to Boston's level by playing a rough and tumble game. They won't beat them that way. They have to use their speed and offensive skills. With Rome suspended four games, Tanev and Ballard should come in and you will see how good Vancouver's defense is. Luongo is also pissed that his teammates hung him out to dry with 8 goals...he'll find his groove the next game, and shut the door. If the Canuck forwards use their speed and skill, Boston won't be able to stop them. Cheers!

A number of errors in that article. Prem is worth alot, but not $4B right now. He will be eventually! Cheers!

Not worried. Against Chicago, Luongo and the team had some psychological hurdles to get over from past defeats, and they were hammered in game 5 after the embarrasing 7-2 loss in game 4. This time, they have no issues like that, and usually Luongo comes out the next game and plays out of his mind...should be a goal-tending duel next game. I would guess that Ballard and Tanev will also come in if Hamhuis can't play, with Rome and Alberts out. That would give them much more mobility on the back-end and a little more offense. Should be one heck of game on Wednesday! Cheers!

I have no dog in this fight, but Block's interview left me far from impressed. I have no idea if TRE is a fraud or not, but I can tell you that if you've got Herb Greenberg and John Hempton mentioned in the same interview, I have as many doubts about the legitimacy of any accusation, as I would about the legitimacy of who has been accused. That was a pretty softball interview by Greenberg...oh wait, all his interviews are like that! For those that think Byrne is a lunatic, feel free to ask him that question to his face, as he may attend our Fairfax Shareholder's Dinner next year at my invitation. Seven years ago they called Prem a fraud and crook. Five years ago they called Patrick "tinfoil hat Byrne". Funny how virtually every SEC investigation on insider trading these days revolves around SAC. There may be legitimate traders at SAC, but it's the culture that's highly suspect, and that starts at the top. How many Fairfax employees, former or present, have been indicted? How many employees, former or present at Overstock.com have been indicted? I think we've lost count how many former or present SAC employees have been indicted! Finally, as far as research is concerned, John Gwynn and Mathew Cantrell put out some pretty sophisticated, voluminous reports on Fairfax. They obviously seemed to have done their due diligence. Many people felt that their comments were irrefutable. Yet, somehow we managed to refute every point. If TRE is a fraud, then I hope they've gotten caught. But if they aren't, I would hope that they would put Muddy Waters completely out of business. Regardless, this should not end well for one party or the other in this dispute! Cheers!

Might be that shale gas fracking can cause instability leading to earthquakes on occasion. Cheers! http://www.theglobeandmail.com/report-on-business/international-news/shale-gas-fracking-halted-after-possible-quake-link/article2042598/

More news on SAC! First redemption due to investigations by a "well-known" investment manager: http://finance.fortune.cnn.com/2011/05/31/sac-investors-begin-to-eye-the-door/ I'm guessing a lot more will follow. Cheers!

Surprise, surprise! ;D Cheers!

Yup! I can't stand him. He's done only one thing right and that was implementing an NFL type, revenue-based model after the lock-out. Cheers!

Isn't life funny. When the Canadian dollar was sick, the NHL pulled out their investment. Now some of the expansion teams are sick, especially with a lower US dollar, and we are repatriating our asset! ;D Cheers!

What do you foresee? What's the alternative to the Euro? I have a hard time envisionning a return to national currencies. The Euro will exist, but the union will be made up of different partners. What benefit is there for Germany to be a part of the union? You will get people asking these questions as Germany's share of the responsibility for others gets larger and larger. Others in better shape will question why they are bailing out everyone else. for all those countries you cited : Spain, Italy, Belgium, Portugal, France, etc. No for some. The French populace needs just any stupid reason to riot. Can you imagine what will happen when social security benefits are reduced in France? Or their obligations to themselves and to support others in the union get larger? Historically in these types of environments, you start to see regime changes...either wide swings to the left or right...usually capitalizing on widespread discontent. Unlike the U.S. where you have 50 states under one government, the European Union is 27 governments under one union. Congress can tell every U.S. state to go to hell if they don't agree with something. You can't tell any of the 27 countries in the European Union to go to hell, because they will just literally walk away. Cheers!

. . . and as an aside I just heard that Boston Pizza is renaming it's chain Vancouver Pizza until the playoffs are over (or should I say until the Canucks beat the Bruins!!) They did the same thing in Montreal when they were playing the Bruins. And yes, Vancouver will knock over the Bruins. If the Canucks playoff run is any indication...Chicago in 7, Nashville in 6, San Jose in 5...Bruins will be finished by the Canucks in 4! Wishful thinking perhaps...but this is the year of the Sanj! 40 years of a Stanley Cup drought will end. Had to lol at the thought of pigs as herd animals. I'm guessing that you haven't tried to herd a group that were out somewhere. Smart ass Tyska! ;D You bloody well knew what I meant. Cheers!

- The EU will provide a package for Greece. - They will restructure debt obligations, which will be viewed as a form of default by the credit rating agencies. - Very strict austerity measures will be applied. - You will get massive outcry by the populace...perhaps a large exodus of both people and capital. - The Greek economy will suffer for the next several years, but will survive longer term. - They will stay a part of the union as the alternative isn't any better. The problem isn't Greece...it's Spain, Italy, Belgium, Portugal, etc. They cannot create a program or package big enough for everyone other than Greece and Ireland. The Euro will not survive in it's current form long-term. Cheers!

I would think one may have to differentiate between western diet and food production. As far as food production, imagine how much could be produced just in the cities with lawns taken out and produce growing in its place. Throw in a couple fruit trees per yard and one would have all that food with the same water and fertilizer use that was going into lawn. The micro climate of the city also allows for a longer growing season and different crop selections than the surrounding country. Actually, as suburban sprawl continues, and urban agricultural land diminishes, you will see vertical agriculture increasing. Vancouver is already starting to experiment with this. Cheers! http://www.google.ca/search?q=vertical+agriculture&hl=en&rlz=1T4GGLD_enCA310CA310&prmd=ivns&tbm=isch&tbo=u&source=univ&sa=X&ei=LILkTfK6EI6WsgOAxokW&ved=0CEEQsAQ&biw=1257&bih=507

Many natural resources have already been exhausted, for example there are water shortages all over the globe from overuse and failure of human mind to conserve. Are there global shortages, or is there a disparity in how the resource is allocated. I know for a fact that we Canadians, in particular in BC, consume multiple times more water per capita than our European counterparts, and probably 30-60 times more than our average Asian or African counterparts. http://www.environmentalindicators.com/htdocs/indicators/6wate.htm From what I understand, that if North America alone moved from raising cows, pigs and other herd animals to legumes, grains, etc, we would be able to feed the entire world with little difficulty. The question that arises: Is there a shortage? Or like poor management at a corporation...a misallocaton of assets? I could go on and on about the flawed logic and validity of "facts".. try viewing a historical price chart of copper for example, but perhaps its best to meditate on the state of the world economy. There has been recent violent social unrest in Greece, Egypt, Syria, Tunisia, Libya, Saudi Arabia to name a few. The people are rioting because of higher food and other commodity prices. They are not celebrating the imminent fall of food and energy prices based on the innovation of their esteemed politicians and bankers. You're examining a relatively short period of time. There were riots in the 70's over oil shortages and inflation. Today, we consume half as much oil per capita as we did then. I believe the author was suggesting that the economics of supply and demand will force humanity to adjust their consumption and create alternatives to diminishing resources. In other words, the resource never fully depletes as innovation and efficiencies decrease the overall consumption rate. Cheers!

I think part of the problem was the exorbitant amount of debt they accrued over the years, and then the ridiculous interest rates they were left paying. Virtually half their cash flow goes to interest payments. That's great for Prem and Fairfax, but not so good for LVLT. Then again, Prem kept them alive, so if anyone should get their share of the cash flows it should be the note holders. But the shareholders are left with little outside of the value of the network...and that's if there is anything left after the note holders get their money back if the network was ever sold. The business is great, but the management and capital allocators at LVLT, including the amazing Mr. Scott, did a pretty crappy job. Without Fairfax, this thing would already be dead and sold to someone else. Cheers!

Hi Ben Graham, I agree with you on LVLT. My point was that LVLT was a so-called "value trap" because of management's mistakes, not because of the business itself. This thing should have been making money hand over fist some time ago. Cheers!

No such thing as a "value trap". Management's either make good decisions in capital allocation or they make poor decisions. The latter results in what investors call a value trap. Fairfax could have been what we know as a value trap had Prem not made good decisions in investments, runoff and structure. Level 3 remains what we call a value trap because of very poor decisions by management in how they allocated capital, financed their operations and viewed the economic landscape. They are a direct result of management and not the business itself. Even a dying business is one that can evolve based on how the remaining cash flows are redirected. Cheers!

Not sure about that claim.. Efficiency today is already at 15%. A 10-fold increase would imply 150% efficiency. Of course if you could do that, you'd _really_ be on to something! An important efficiency barrier relates to manufacturing costs. Since the sun is free, the greatest concern is capital cost and maintenance. Bringing the total cost of ownership down will help proliferate the adoption of solar over traditional fossil fuel power generators. I found the article. Sorry about that...not a few years out, but in ten years they believe they could replace photovoltaic. Cheers! http://www.kansascity.com/2011/05/25/2904359/mu-prof-helping-develop-bright.html

People hate change - apparently more than being gouged at the gas pump. I agree with Munger that it is completely obvious that we must harness the sun's power directly, and we should probably get on with it. I just read an article on the weekend that using nanotechnology and thin-film technology, they will be able to advance the efficiency of solar photocells by 10 fold in the next few years. The thin film technology will allow us to put photocells into roofing shingles, car roofs, exterior of clothing, etc. You name it! This technology isn't some distant vision, but could be in production in the next few years, if not sooner. Think about it. We are on the verge of bringing extinct animals back to life. Several private companies are trying to resurrect the Mastadon. On-land fish farms are producing fish that avoid the bacterial risks of water-based fish farms. At risk species in the next 20 years may not exist, as advances in biology will allow us to reproduce organisms on the verge of extinction. When I was a biology student 20 years ago, it was only a dream to do the things we can do today. We've mapped the human genome! There is a very distinct possibility that in the next 20-40 years, several diseases that are incurable today will go the way of polio. I'm an absolute believer in technology, and marvel at the ingenuity of humanity! Cheers!