Parsad

Overstock.com's 2007 lawsuit against prime brokers due to naked short selling of Overstock.com stock, is now including racketeering charges against Goldman Sachs and Merrill Lynch, due to new revelations under discovery. Cheers! http://finance.yahoo.com/news/Overstock-Adding-Racketeering-prnews-361017108.html?x=0&.v=1

I've followed Markel for nearly as long as I've owned Fairfax, and used to attend their meetings every year in Omaha. I've never owned Markel shares though until a few months ago. We bought just barely above book value, and I'm happier owning it than Biglari Holdings! It should trade around 1.3-1.6 times book, so we expect it to go up some more. Cheers!

Yup! Smart guys, good guys...ethical guys. Love'em! Cheers!

Markel Ventures has bought retail intelligence company RD Holdings. I guess no better time than when other intelligence companies and experts are being indicted! ;D Cheers! http://finance.yahoo.com/news/Markel-Announces-RD-Holdings-prnews-1486289676.html?x=0&.v=1

If you really think there is going to be deflation, you should buy long-dated treasury bonds. If you think you will be in a prolonged deflationary environment. If you face a couple of years of inflation or deflation, it won't matter. Buy cheap, sell dear. Cheers!

I can't believe the valuation the market is putting on Krispy Kreme these days. Nuts! Cheers!

Terrific video Carl! Cheers!

How many shares voted from the total outstanding (percentage-wise)? How many of the voting shares (percentage-wise) were controlled through the investment by BH in the Lion Fund? You may be surprised by exactly how many people voted for the plan. Cheers!

Middle ground people... come to the middle ground. Sometimes there is no middle ground. Someone I spoke to this morning told me "I just know the difference between right and wrong, and it seems wrong...". There is no blurred line here. Name Change - Wrong! Compensation Package Implementation - Wrong! Buying Back BH Shares Through Lion Fund - Wrong! No middle ground. We all know the difference between right and wrong. The only thing you could chalk it up to is a disconnect from reality. In that case, add independent directors who are large shareholders, not maintain a compliant board of directors. You want oversight, create a board that will give you that! Cheers!

Why is it so bad that he is buying BH stock through the Lion Fund with BH's capital? If he believe BH is undervalued and believes it is a good way to invest the capital, why is it so bad? If they were such a good investment, then why not retire the shares through the treasury, which would definitely benefit BH and all shareholders? So was he buying it because it was a good investment, or was he buying it to acquire votes on the compensation package? If those shares are retired from the treasury, then those are votes that cannot be exercised. What do you think his intention was? In my personal opinion, and if you view it objectively, the CEO's share vote or shares controlled by the CEO, should be excluded from any vote on his/her compensation. Not that it would have made an impact, since it was overwhelmingly in favor, but these things all add up to good corporate governance practices, and lately they have been lacking at SNS and BH. As a word of advice to those buying it on his abilities...never buy a stock based on a manager's abilities. Buy it because it's cheap, not because of management. Those people who bought Berkshire at $90K per share ten years ago could have done a hell of a lot better! And that was with Buffett at the helm. Cheers!

No, it matters. If you were disappointed with Sardar, it was because your expectations were very high, comparing him to Buffett in all respects. When Warren took over BRK, he was already a very rich young man just happy to be in the investing game - salary and incentives did not matter. Since he was firmly in control of BRK and was free to do whatever he wanted without looking over his shoulders. That is not the case with Sardar. His stake in BH is very small, not rich, eager to be super-rich ASAP, talented and aggressive. An X-hedge fund mangaer now a CEO of a corporation can not get rich earning $100k per year. If you had understood those limitations, you would not have been disappointed - you would have remained a happy BH shareholder and an admirer of Sardar. So Kumar, exactly what does the name change have to do with him making more money? I've followed Sardar probably longer than anyone on this board. I invested in Western Sizzlin, Steak'n Shake and subsequently Biglari Holdings. The compensation package as introduced was fundamentally flawed, as was the name change...in particular the way they were introduced and handled with shareholders. I didn't have a problem with the form of compensation, just the hurdles and incentive fee, since the capital is now captive...his risk is less than when he managed the Lion Fund. The truth is that shareholders who have now stayed with Sardar are the ones that are misleading themselves. They've bought into his abilities and now are ignoring deficiencies in character that have become glaringly apparent. Accompanied by a passive board, that becomes a dangerous combination where an individual is more likely to make miscalculated bets. We missed an early example of this when he had put virtually all of Western Sizzlin's capital into Steak'n Shake. Now it is becoming clearer that the accumulation of capital is paramount to anything else. He's buying BH stock through the Lion Fund with BH's own capital for crying out loud! Cheers!

Meaningless, but still pertinent to the interest rates Fairfax pays on their debt, so not entirely unimportant. Cheers!

Looks like the credit rating agencies may finally be seeing the light. Cheers! http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/fairfax-up-for-a-potential-moodys-upgrade/article1836281/

For all intents and purposes, we lost the proxy. Our committee members, particularly Dave and Rahul, did a fantastic job running this thing on a shoestring budget! Ironically, the one large shareholder group that ran their own campaign against ITEX a couple of years ago, decided to vote FOR management this year and cost us the election. I personally expected this group to withhold their votes, since both ISS/Riskmetrics and Glass-Lewis had signficant concerns about corporate governance and board independence at ITEX. But then I chalked it up to this group having difficulty recognizing corporate governance issues within their own organization, so why would they recognize it at ITEX or anywhere else. C'est la vie! It's funny though, I personally have a very good relationship with some franchisees, even those that put out a letter against our group, and I think the board in general is open to dialogue. The problem is that the CEO is as stubborn as a mule and is reluctant to have any cohesive dialogue with our committee. I can only imagine that long-term, they would much rather prefer to have us on their side, then the large shareholder group that just voted for them. But that isn't up to us, as only they can make that decision. All in all, shareholders have been very approving of the initiatives the company has undertaken after we brought them to their attention. I just hope ITEX decides to do what is in the best interest of providing security and opportunity for their core franchise base, as many of these franchisees do not like the uncertainty and discourse permeating the company. We don't enjoy it either, and will do everything we can to work with management, as we have in the past. Ultimately, it is up to the CEO to decide if he wants to be constructive with his largest shareholder base. I'll have plenty to say about this in our quarterly letter, and even more in our annual report which only goes out to partners. Nonetheless, we aren't going anywhere and look forward to doing this again next year if necessary! The ball is in ITEX's court. Cheers!

So how does a guy go from being a Bell Canada repairman, to getting a senior executive position at Fairfax, and running one of Canada's most successful mutual funds? Does anyone know the details of that jump? did he just show his investment club returns to Watsa and get offered a job? Because he is one of the most ethical people in the industry, and probably the most honest person I've ever met! Francis has a CFA. He worked with Prem at Gardiner Watson and was the one who told Prem about insurance float and Buffett. He's probably one of the most trusted friends and advisors of Prem and Fairfax Financial. He also incidentally was one of the guys behind the credit default swap investment at Fairfax. Please read the attached articles to get a better idea of the backstory. He's one of the brightest guys I've ever met as well and a dear friend. Cheers!

Where? Let the race begin - Biglari vs ? Both Fairfax and Markel are cheaper than BH. They also have the leverage of float and Markel owns entire non-insurance companies. There are companies still trading at less than 4 times free cash with no debt...we bought a bunch of one two weeks ago. BH will go up in price...that is a given simply based on the Steak'n Shake engine that is now humming really, really nicely. But it isn't cheap...it's fair value. Cheers!

I think investment contests are silly. They trivialize the intellectual framework required for successful, long-term investing with a margin of safety, since contestants would attempt to realize the biggest return in the shortest timeframe, regardless of risk. Call me an investment snob, but unfortunately I am. There are plenty of sites to enter such contests, and this won't be one. Cheers!

The whole thing - BH, BCC and operating subs look convoluted even with Biglari stating otherwise. I agree. I also think that there is an inherent conflict of interest in the Lion Fund holding BH, while the parent is a limited partner. Combine that with the distorted view it gives under US GAAP. Also, is the investment as a limited partnership an ACTUAL investment, or is it simply to retain control of a large amount of shares? Will more cash be funnelled into the Lion Fund by BH over time as a limited partner? Will the Lion Fund continue to buy more shares of BH in the open market as an "investment"? Incredible results, look at the free cash flow, astounding. Company still looks undervalued even at these prices because there's nothing to suggest that Biglari is slowing down. Not cheap by any means. It's fairly valued, even with Sardar at the helm. You are paying over 20 times earnings, 10 times free cash and nearly two times book. Add in the fact that intrinsic value per share has now decreased going forward, based on the new compensation package that will kick in. With that package, fair value drops significantly...especially the longer you hold the stock and the better he does! He continues to write very well, and the continued ideas at SNS will help, especially the lower build out costs for franchisees and operating cost containment. No comments on Fremont tender. The compensation discussion was a real cop-out! - He comments that there is no need to change your attitude on compensation simply because you've changed the structure of the entity...but unfortunately there is a real difference...the capital is permanently locked in. - On top of that, you can issue as many shares as the market will bear, so that you have access to more capital. - Fundamentally, he now has a very accessible form of capital to utilize and receive his hedge fund compensation, compared to what would have been achievable at the Lion Fund. At best, he has significantly compressed the time frame needed to achieve the same compensation, since he would not have been able to raise $300-$400M in the Lion Fund so quickly. - Also, no comment that the 82% vote had no bearing on the compensation package, but only on the tax treatment. Cheers!

Still working on the details. I will post an update early next month after everything is arranged. Cheers!

When looking at a lot of Internet companies like Overstock, Amazon, NFLX or TravelZoo, I could not help but wondering where all the optimism came from. To me, many of the growth projections are just too unrealistic and the multiples are outrageous. I would have to disagree with you here on Overstock. Based on price to sales, they are selling at a fraction of what Netflix and Travelzoo are selling at, and about a sixth of what Amazon is selling at. If you get the incremental improvements in net margins that I expect at Overstock.com, then it is selling for a modest price compared to its growth...and immensely cheaper than the competition. I think after the 4th quarter and 1st quarter 2011, you'll get a better picture of Overstock's model. Cheers!

I wouldn't worry. Prem's ultimate goal is to be proven right, not monetary...that's just icing on the cake. If SAC is the target, and the government runs them out of business, I don't think Fairfax will be heartbroken that they didn't get a settlement or award. Cheers!

More links to SAC in the government's investigation, but limited cooperation. Cheers! http://finance.yahoo.com/banking-budgeting/article/111533/new-players-ties-surface-in-trading-probe;_ylt=AvJLB8bymo9sqA4gUTv45Zy7YWsA;_ylu=X3oDMTE1ZnNiNDBwBHBvcwM3BHNlYwN0b3BTdG9yaWVzBHNsawNuZXdwbGF5ZXJzdGk-?mod=bb-budgeting&sec=topStories&pos=3&asset=&ccode=

Sure has missed out on a lot of the gains in the market. Sold out the kids account in June at little over 402, to insulate their account a little from the massive hurricane season forecast . Bought back in today at a little under 399. It's not easy being a FFH convert. I wouldn't worry about it too much. They were wrong for a long time before they were proven right on the credit default swaps and "1 in 50 year storm." In this business, you often are going against the grain and that's the only way to preserve capital over the long-run. I suspected they would be wrong in the short-term, and Prem expected as much from statements he made in the media...there is only so much you can do when governments around the world are doing everything in their power to lower interest rates and spur asset inflation. But Prem looks out 5 to 10 years, not one or two years! They should be able to increase book value at a reasonable rate simply from their dividend/interest income and organic growth in the insurance business. The Lollapalooza effect comes into play when they get a signficant opportunity to invest in undervalued securities. They will face some volatility in the stock price until they can exploit such occasions, and it will be tough for the stock price to outperform the market when people are so optimistic. But the consensus is often wrong longer term, and I don't expect things to get easier as governments run out of ammo. At some point, the system has to cleanse itself and the piper will be paid...be it through a protracted stagnant economy or severe volatility. In general business is improving, but frictional costs to do business will increase and similar costs are going to hit the average consumer. Any inflationary costs will also ultimately be passed down to businesses and then consumers. No easy way out, and that's what Prem expects. Cheers!

Very good article on Buffett and his bridge partner, Sharon Osberg. Cheers! http://magazine.wsj.com/people-ideas/partnership/like-a-marriage-only-more-enduring/

It's paid for by the ads you guys all complain about! ;D Glad it's working faster. Cheers!