Parsad

Cardboard, it might worth the wait for the iPhone 5. Rumor has it that it will have a larger screen and better camera. The camera on the iPhone 4 isn't bad, but the new one is supposed to be 8 or 12 megapixels. By the way, I thought Facetime would be gimmicky, but it is actually pretty cool. I don't have it on my iPhone 3GS, but my Mom and brother use it all the time on their iPhone 4's. To give you some idea how useful I find the iPhone. As I mentioned in a past post, I started taking transit to and from work, Monday to Friday, about a year and a half ago. Email, news, stock market quotes and even this board are all read by me on my 35 minute ride each morning. No stress, I'm listening to music while doing all that, and the multi-touch screen on the iPhone works fantastic. When I arrive at the office, I'm actually an hour ahead of the game by the time I sit down. On the way back home, same thing...catch up on the evening news, etc. National Post, Globe & Mail (online), Financial Times, CNBC, Bloomberg and the message board all read on the way to work. New York Times, CNN, TSN, CNET, the message board and anything else read on the way home. No wasted time! Cheers!

I suspect both Fairfax and Berkshire will have some losses related to this. Cheers! http://www.bloomberg.com/news/2011-02-22/new-zealand-s-earthquake-may-become-costliest-insured-disaster-since-2008.html?cmpid=yhoo

Hi Nodnub, It's this one: http://www.bestbuy.ca/en-CA/product/toshiba-toshiba-satellite-13-3-laptop-featuring-amd-athlon-ii-neo-k325-processor-t230d-00w-red-t230d-00w/10161728.aspx?path=f647523e4228ff55d8851aa6a49ede12en02 It's still pretty cheap at $499 CDN. I bought mine just after Boxing Day for $440. Sorry, that should have also said 2 kilograms, not 2 pounds! The keyboard is fantastic, and the laptop actually looks way better than in the pictures. I really like it alot! I looked around for a while, and for the money it's really a damn good laptop. Cheers!

Unfortunately, we still use paper for subscription documents and deposit slips that require signatures...so, I still need my laptop. I can do pretty much everything else from my iPhone. Although I prefer reading long documents on the laptop. The iPhone is best for news, quotes, etc. I've got a brand-new super light notebook...less than two pounds and a 13.3" screen...just bought it a couple of months ago for $440! Apple can't beat that! Just an awesome chiclet keyboard. Does a heck of a lot more than those netbook things. Cheers!

I had an HTC Touch, which was garbage, and before that a Blackberry. I've tested a bunch of other phones, and I don't like the user interface for any of them as much as I like the iPhone. I also find it is a heck of alot more useful than an iPad. Even if they add phone/cellular service to it and a camera, I'm not sure I would get much utility out of it. But the iPhone is as useful to me as my laptop. With those two items, I can work from anywhere. Cheers!

I know it is not an investment related topic or maybe it will turn into a nice discussion and show Apple's competitive advantage or not. I still would like if possible to tap into this board's knowledge and experience on the topic. The phone will be used mainly for phone calls, surfing investment sites (getting quotes/news), search on Google, e-mail. Hi Cardboard, That's exactly what I use my phone for and also listening to music. Without a hesitation, I would recommend the iPhone. It was way ahead of the competition when it first came out, and the user interface is still light years ahead of everyone. I don't know why I was using anything else before. It is very intuitive, which is what the best of the Smartphones out there still can't accomplish. Web pages show up properly, there are tons of useful apps available at no cost or little cost, and I haven't had a single problem in almost a year of constant use. The iPhone5 should be coming out in the next few months, so I would wait for that. My entire family has switched to the iPhone in the last year. Alnesh who has always used a Blackberry is also considering switching, since there is an app where you can utilize Blackberry messenger through your iPhone. I love it and will not use anything else. Cheers!

I've got a question for everyone: Was there ever a time in history, when neither Congress, nor the government had to be fixed? Yes, I'm being facetious. My point being, if everyone knows what's wrong with it, then why is it never fixed? I was watching Letterman tonight, and Letterman asked Rumsfeld, who was his guest, how has Obama done so far? He sat there for a good 20 seconds without saying anything, and then said..."Well, I'm truly concerned with what is happening. This budget that has just been approved...somebody has to have the courage to do what is right." The audience clapped. My question is, how come no one in the last 35 years has had the courage to do the right thing? I mean Bush was in government for eight years and Greenspan was on guard for like 20 years before Bernanke, but both Obama and Bernanke are the ones driving the country into the ground. And no, I'm not picking on the Republicans, since Clinton encouraged much of the friviolity with Fannie Mae and Freddie Mac, as well as helping create the Tech Bubble in the first place. People believe that confirmation bias is prevalent in investing...well the truth is confirmation bias is simply anyone confirming their own theories by picking and choosing bits and pieces of history. Perhaps Congress isn't actually broken. Maybe the United States succeeds simply because it's citizens always think that everything their government does is wrong, and they have the right to be able to say so whenvever they want. ;D Cheers!

Nierenberg runs D3 Family Funds in Camus, Washington, not far from Portland, Oregon. They focus on microcaps and smallcap stocks, with a slight activist bent by joining boards of the companies they invest in. They had a good record from what I remember before the credit crunch. Not sure after. http://d3familyfund.com/bios.aspx I also heard that their third partner, Cara Denver, was pretty hot! ;D Too bad guys, she's married now. Cheers!

Philip Fine wrote a fantastic obituary for Peter Cundill that was published in the Globe & Mail on Saturday. Thanks to Mark for sending it to me! Cheers! http://www.theglobeandmail.com/report-on-business/peter-cundill-found-wealth-where-others-feared-to-tread/article1912452/print/

Thanks everyone...much appreciated! I'm glad the board is useful to you all and has made some impact. It's definitely influenced me. Cheers!

Hi Paul, What you really should be looking at is growth in book value per share between 1996 and 2010. Fairfax's book value per share in 1996 was $63.31, whereas book value per share at the end of 2010 is $379.46. That's an increase of 12.7% annualized. I believe the S&P Midcap 400 TR did a little better than 9% annualized over the same period. Market prices can be significantly overvalued and undervalued at various times, but ultimately market prices track increases in book value per share. In Fairfax's case, the market assumed ridiculous views on the stock back during 1996-1998. It would have been very silly for anyone to hold on to Fairfax stock back in 1998 when it hit $600 per share, while book value was only $112. If you go to the second to last page of Fairfax's 2009 annual report, you get the best view of the company's progress over the years. http://www.fairfax.ca/Assets/Downloads/AR2009.pdf Cheers!

I started the old MSN Berkshire Hathaway Shareholder's Board on February 19, 2002. Nine years ago today! That board was meant for just me and a few friends to talk about Berkshire Hathaway and other investments. I never imagined meeting Prem, Francis or anyone else from Fairfax. I had just met Mohnish in Omaha, and had no inkling that we would eventually become good friends. I never imagined I would be running my own funds a few years later. Working on a daily basis with my cousin, who grew up with me like my brother. The fantastic partners that trust and support us. Our director Andrew Cooke, who has become such a great friend! As Buffett says, I tap dance to work every morning. This afternoon I just had lunch with "Triedtestedandffh" here in Vancouver...first time I met him. In a couple of months, 70 of you will be joining me for dinner in Toronto...70 people I never knew before...and we'll be raising money for a worthy cause. Cheers and happy anniversary to you all!

Not this year though, I'm having surgery to fix my foot on April 4th (won't be walking for six weeks). Look forward to you coming to Toronto. What happened to your foot Eric? Cheers!

No offense Sanjeev, but I think Mohnish is not being truthful to you. The way you frame that statement is he didn't add to the account. If you plug those numbers in over an 11 year time frame 99-10, the average annualized return is 75.93% AFTER tax! Do you really believe Mohnish? If you can provide audited numbers, I stand corrected and I apologize for doubting him. Of course he added to the account! Almost all of his incentive fees were put back in. My point was that regardless of macroeconomic factors, a good business is a good business. At best, Mohnish was worth $10M after the sale of Transtech, so where did the rest of the money come from? Macroeconomic factors did not affect Mohnish's ability to create wealth, did it? Not for his partners, nor for himself. Cheers!

To ignore macro trends and their extrapolations is madness! Individual investments do not exist in a bubble, no matter how we try to rationalize them. Case in point.. for the last 20 years stock market investors have hung on the every word of the Maestro and his successor, knowing that the growth profile of their investments will be affected by the setting of the interest rate and the flood of liquidity engendered by lower rates. They have blinded themselves to the consequences of cheap money (monetary inflation) and indulged the wishful thinking of something for nothing. As the ponzi unwinds through runaway inflation (it cannot be a deflationary end, as long as the Fed can and will print unlimited money) every paper asset and mispriced risk asset will be toast. Macro will trump micro in the end. Please take this in the nicest way possible...rubbish! ;D We bought ITEX four years ago and our average cost is $3.31. Today it's $4.55 and undervalued, pays a 3% dividend and continues to generate steady free cash flow. Did the macro affect this business or ITEX in any measurable way? No, their balance sheet is stronger, their cash flows are the same and the business is completely intact. I bought Fairfax 7 years ago at $180, then during the same year I bought more stock at $65. Today the stock is at $380. Their balance sheet is stronger than ever and the business is bigger than ever. Did the macro affect them in any measurable way? If you bought Berkshire back in 1999/2000, the A shares were trading between $45,000 and $75,000. Today, they are at $130,000 and the business is bigger and as good as it ever was. Did the macro affect Berkshire in any measurable way? I'm sure you can come up with numerous rebuttals to this, or even show me how certain stocks are the same price or at even much lower prices. But the truth is that any investor could have found quality investments and done reasonably well by buying at a discount to the intrinsic value of those investments. The biggest argument I can give you to why macro is irrelevant...Mohnish put in $100K into PIF I in 1999, and today his stake is worth $50M...that's after losing 70% in 2008 and 2009, and then rebounding from the lows in 2010. Macro doesn't matter to the degree many people are speculating. Find good businesses, invest in them at great prices and build them for the long-term. Cheers!

It seems to me that when you - Buy when things are cheap, sell when they are dear. - Look for things that are distressed and that no one else is buying. You are predicting the future ! i.e. things will get better and people will start buying them Yes, to a certain degree. What you are doing is buying something worth more than it's selling for...and that price will rationalize itself over time. You are not speculating on the direction of the economy, metrics or interest rates. Cheers!

hey.. Prem predicts macro too. The world is too intertwined these days to be blind to macro issues. Buffett and Prem don't know either. As much as all of us try, none of us will get it completely right. What they try to do is protect to the downside because of the risks to their insurance business. Last time I checked, none of us ran an insurance business. ;D Cheers!

Will you guys shut up with your predictions and macro-views! ;D It's driving me bonkers. - Buy when things are cheap, sell when they are dear. - Look for things that are distressed and that no one else is buying. - Don't try and predict the future. - Always keep some dry powder lying around. Other than that, go read some 10-Q's, 10-K's or a good book! Cheers!

Parsad: Hope you take no offense at my rather pointed concerns and vexation. Really like the board and have been a long time FFH fan but am definitely frustrated with some of the recent decisions and this filing's disclosure quality has me a bit more frustrated. Realize this may not pass the worth your time test: but if Prem does care to hear from shareholders that think they have legitimate issue(s) to raise, feel free to pass it along if it is appropriate or worth your time. Nope, no worries...that's what the board is for. By the way, that's why they read the board...right up to the top! They want to know what you guys think, how you feel and if there are any concerns they can address in future reports. Regarding your questions...these are my answers naturally: 1. The NYSE delisting which I viewed as a bit arrogant and peevish and unnecessarily limiting. The savings I think this was the exact opposite of arrogance. It was an admission of error or miscalculation. They realized the stress and expense related with what happened from 2003 to 2007 was extremely painful and just not worth it. Plain and simple! Investors can still buy the stock, and it has no effect on operations or intrinsic value. I think it was the right move in light of how clearing houses operated before the credit crisis. It's every company's ambition to be big-board listed in New York. Prem came to the view that he's fine with being a Canadian insurance company listed in Canada. 2. Very disappointed with their MD&A and numerical presentation here in this filing. After all FFH and Prem has been through, thought they would be over detailed when you have a really bad quarter even if it is only bad "looking/short-term" mark to market/ short term etc. It's kind of why I said everyone should just wait to the annual report comes out. There is an immense amount of disclosure in there. Prem will probably incorporate a few more things within the letter in light of how shareholders feel after the press release and quarterly. 3. The way too early time of the conference call imho has been making for too few questions especially quality ones C'mon on this one Ok22! ;D If people want to ask a question, they should be able to set an alarm clock. I used to always wake up at like 5:20am PST to listen. Now I don't because things are running smoothly at the company and I can ask all the questions I want in Toronto each year. 4. The decision to hedge 80%+ of your portfolio. Why not then just be 20% long invested and in cash? Long term oriented shareholders should be ok with having dry powder and waiting for FFH to pull the trigger. Feel like they are being overly cute and complex with the hedge/swap/derivate maneuver and mathematically don't think it makes sense at such a large percentage? Again, if I am wrong would love to hear a detailed explanation on how you can invest $100 and then hedge $80 and then still make money if the s I'm no fan of hedging. I think often they just increase your frictional costs, and if you hit one out of the park...it's often just dumb luck with the timing. Our hedge is just straight up cash in short-term T-bills. But Fairfax is an insurance company and one with only an A-rating. With their levered portfolio, any signficant swing (one that you and I could easily handle) could affect their statuatory capital, and reduce their ability to underwrite. At the same time, any significant drop in shareholder equity can also increase their debt/equity ratio and affect their credit rating. Remember, for a property casualty insurer...anything less than an A-rating and you're pretty much out of business. The hedges would not be as important if they held an AA or AAA-rating...but they don't. 5. Unnecessary high bar jump investments like Abiti, canadian retailer turnaround, messy regional airline situation, Level 3, Overstock, usg, dell etc. They were liquid when lots of higher quality companies/business models were cheap, why stretch for these higher bars to jump over. Is there something in the DNA that says we like to buy messy insurance companies and fix them so they are attracted to messy equity investments. fyi, i see and hear their JNJ in the portfolio response but dont consider the price they bought it at to be that great. JNJ is going to have issues if the stent business has issues as that was masking the growth and margin problems in the rest of the business and with their recent consumer product issues and medical device issues that I see could occur, I don't think that JNJ is at a sufficient margin of safety. Almost impossible now for JNJ to find a small Neutrogena for a great price and grow it into a large business to make up for medical device revenue/margin issues. Hey, this is where it would pay for you and anyone else to come to Toronto. You can ask all these questions there. A couple of years ago I asked them who the genius was that bought Canwest and Torstar! ;D Hamblin-Watsa's team are pure Ben Graham students. They buy distressed stuff that no one wants. That's what Prem, Roger, Brian et al have always focused on from their early days and really what they still do...think Walter Schloss, not Warren Buffett. At the same time, they do buy the higher quality businesses that are trading at relatively cheap prices. For example, they loaded up on financials including WFC, USB, JNJ, WMT, GE all near the bottom of 2009. They also made a number of similiar investments in high-yielding preferreds like Berkshire. In regards to OSTK and LVLT...the story isn't over there yet. With LVLT, I think they aren't that far from recouping all of their investment simply from the interest LVLT has had to pay over the last few years to them...anything else will be icing. 6. CDS gains caused inflated head syndrome at FFH with respect to investment process? Believe me, there are no inflated heads at Hamblin-Watsa. The CDS was a one-off attributed to Brian Bradstreet and Francis Chou...no one else. They were out of ideas back in late 2004, early 2005, and Prem just said in a meeting..."Anyone have any good ideas?" Brian and Francis had briefly talked about CDS' between the two of them, and then they sheepishly answered "Well, there are these credit default swaps...". That was it! They started with a small bet, and as things progressed, or perhaps regressed, in the credit markets, they upped their bet. These guys all love their jobs...they just enjoy doing what they are doing. They really don't care about the accolades, but appreciate the respect that any of you guys show to them. In regards to questions about underwriting, etc. Because premiums have been soft and continue to be soft, Fairfax's combined ratio alongs certain lines will increase dramatically as expenses cannot be cut as fast...that's what you see primarily at Northbridge and C&F...I don't expect Berkshire's business to be much different. The U.S. combined ratio was so high because of Zenith's 154% combined ratio for the quarter. I don't have a problem with the high combined ratios at the moment, because I don't want them writing unprofitable business. When the market turns, you will see Fairfax's subs write large amounts of new business at better rates. But the returns from these decisions won't be apparent for years. Cheers!

I think the mark to market losses aren't really ugly, but just the reality of what happened in the last year. The munis are insured by Berkshire so they are fine. The cost of hedging your portfolio if you're wrong...be it short-term or long-term...is the potential loss in gains. Underwriting was hit hard in North America during the 4th Q. I'm guessing the cold snap had quite an impact, and that should probably carry into Q1. The new businesses should have more of an impact going forward. More interested in the annual report and letter, and exactly what Prem sees going forward. Cheers!

Hi Josh, He's exactly the way you saw in the presentation...not one bit of difference. I've known him for nearly a decade and he's as humble and self-effacing as he's always been. Whatever he says, he does! A great friend and a great person...just like Francis...they are brothers from another mother! ;D Here is the interview, as well as a few of the other ones done in the past. Cheers!

My thinking has generally been in line with your excerpt. At the end of the day the future appreciation for a richly valued stock is potentially quite poor or mediocre even if the business does well (see MSFT over the last 10 years). So, I'm comfortable with the notion that even if I like the business, if I can't justify the price (would you buy it today?), then selling needs to be strongly considered. I'm curious about how strategy-wise or tactically, how people approach the problem. Well you're correct here. In particular when it is based on the stock market. While you should perceive each investment as a partial piece of ownership, the fact remains that the market allows you to exploit inefficiencies in valuation. You buy something at significantly less than intrinsic value and then sell that as it approaches intrinsic value. Where you sell is completely based on your level of comfort with the risk involved in holding something as it appreciates. An individual's own private portfolio would allow them to hold a stock significantly longer, since there are no outside forces demanding their capital back. A portfolio manager may have to sell earlier, simply because the risk of volatility in the fund could cause an exodus of capital. Ideally both would be the same, but unfortunately that's not the way it works unless you have captured capital through a corporation, or very long lock-ups. For any individual, sell based on your comfort level with where the price is relative to intrinsic value. There is no hard and fast rule. Cheers!

The question is Parsad when are we going to see you up there speaking? If and when I earn it! You have to pay your dues...and everyone so far that has spoken has. They just don't let anyone into the club! ;D Cheers!

Well, I'm glad they had Tim speak. I've been bugging George for a while to have Tim present to his students, so I'm glad the opportunity came up. Congrats Tim! Cheers!

As some of you know, Mohnish started Dakshana a few years ago, and he's had great success. We are supporters and Corner Market Capital started with a small donation last year, which we hope to double each year. Prem, his wife Nalini, and I believe their daughter Christine and her husband, visited one of the Dakshana schools and met with the students and program leaders. Mohnish has put some photographs up on Dakshana's site: http://www.dakshana.org/bigimage.asp?ID=176&yearid=2010 Click the "double backwards" arrows to move to each slide. Cheers!