Parsad

The Yankees are worth at least what Manchester United would be, so about $1.5B. Over 37 years, that's a 14.9% annualized yield, not including all the capital they've taken out and put into other businesses or their salaries. Cheers!

The NBA Golden State Warriors have sold for $450M! The purchasers...the managing partner at Kleiner Perkins and the chairman of Mandalay Entertainment. Sure higher than the $6M Steinbrenner paid for the Yankees in the 70's! Now that was a steal. Cheers! http://www.cnbc.com/id/38262946

The chief is bluffing guys! You're going to see more of this as cash-strapped states and municipalities have to make hard choices, and department heads have to pull this stuff to get some concessions. We lived through all of this in the 70's...remember how bad things were in New York? Miami in the 80's? Los Angeles in the 90's? Detroit today! Cheers!

Markel has acquired Omaha-based insurer Aspen Holdings (FirstComp). Cheers! http://www.prnewswire.com/news-releases/markel-to-acquire-firstcomp-98451274.html

It may be institutions (who never actually follow stocks) are just pouring money into whatever stock has been upgraded. So dumb money is finding its way there. The stock isn't expensive, but its not cheap either...especially after considering the impact of the new compensation package. Cheers!

Association of American Railroads report on volumes for 2010...up significantly in Canada and Mexico in 2010 over 2009, with large increases in the U.S. as well. U.S. volumes still down from 2008, but looks like things are slowly improving. Cheers! http://www.aar.org/newsandevents/freightrailtraffic/2010-07-08-railtraffic.aspx

NY Post now has a hold of this thing...geez! Cheers! http://www.nypost.com/p/news/business/burger_heaven_1eWjcJgVGgV8NtmtUJyNHP

Munger made use of leverage and margin in the early days of his partnership. One time he borrowed a million dollars from a bank to do a short term arbitrage on BC Power shares - to make a spread of around 10%. Munger also lost 70% of his portfolio in 73-74, but I don't think you want to do that Al. ;D By the way, Mohnish also used leverage in the early days of the Pabrai Funds, but he too became enlightened and stopped. One mistake is all it takes...just one...and the knife cuts fast and deep. Cheers!

As I mentioned in a previous post, the 13G does not preclude Sardar from making a tender offer. I know this is a company he likes, so I would not be surprised to see him make a tender offer. Cheers!

Here's an interview with Patrick Byrne on Overstock.com. Cheers! http://www.investors.com/NewsAndAnalysis/Article.aspx?id=539875&ven=yahoo

We do not use margin in our funds, corporate accounts or personal accounts...all cash-only accounts. We won't ever! One mistake could cost you a hell of a lot, if not everything. And if you're shorting stocks on margin...that's a deadly combination. I know Al very well, and one of our partners also uses margin regularly. As Al told you guys, he received two margin calls, but he was liquid enough to easily cover. Our partner who uses margin covered his positions before the credit crunch at my behest...it saved him a fortune! I cannot in good conscience encourage any investor to use margin. Plenty do, and plenty lose money over the long-term. I remember this story that Charlie Munger told at one of the Berkshire AGM's. An investor came up to him and said "Mr. Munger, I'd really like to be like you one day. What can I do to achieve that...only quicker!" And there's the rub. Everyone wants to do it quicker. Cheers!

Doesn't really matter to me...I'm a Nash and Kobe fan...anyone out of the West baby, anyone out of the West! ;D Cheers!

Yes, that's what that paragraph sounds like. I sure hope that isn't the case, as that would be a real f**k you to shareholders. The only other thing I've heard of as grievous was Frank Stronach's deal to sell his multiple voting shares this year. Talented guys, but awfully greedy behavior! As mentioned in our 2nd quarter letter, we are completely out of BH...we had to walk with our feet after watching all this happen. Cheers!

FFH's growth in TBV/SH for 25 years was 17%+, not 26% as shown on the graph. According to the 2009 Shareholder's Letter, Prem said: In 1985, we began with $30 million in assets and $7.6 million in common equity.We ended 2009, 24 years later, with $28 billion in assets and $7.4 billion in common equity – almost 1,000 times higher than when we began. More importantly, since inception, book value per share has compounded by 26% per year, while our common stock price has followed at 22% per year. Not sure where you got the 17% from? Are you including the shares issued for ORH? Cheers!

Here are a couple of very good slides showing Fairfax's "return on investment" and the "relationship between growth in book value and stock price". The slides were produced by Dowling & Partners. Cheers!

Article on Ross' investments in distressed regional banks. Cheers! http://www.cnbc.com/id/38144823

I think Prem should consider adding Jeff Stacey of Stacey Muirhead to the board. Jeff's been a long-time Fairfax shareholder, supporter, and he's on the University of Waterloo's endowment committee. Jeff's a very good investment manager, knows Fairfax intimately, is honest, ethical and a damn fine Canadian! As a Fairfax shareholder, I would be very happy to see Jeff represent shareholder and company interests. Cheers!

Article on both David Einhorn and Van Hosington's opposite views on inflation...yet both are betting on hard times for the U.S. Cheers! http://www.theglobeandmail.com/globe-investor/investment-ideas/betting-on-hard-times-for-the-us/article1632571/

A few videos of the Huffington Post interviewing Buffett. Just keep watching after the first video and the commercial...it keeps going. Cheers! http://news.yahoo.com/s/yblog_upshot/20100708/bs_yblog_upshot/buffett-recounts-the-best-advice-hes-ever-received

Kudos for getting out and setting some standards! Cheers! http://www.cnbc.com/id/38134090

Sanjeev, I seem to have missed your earlier explanations surrounding this compensation structure's fallacies. I am also not able to garner too much from this comment. Please explain. tia <that the capital is captive inside a corporate structure.> Hi Carl, Sardar's main argument for implementing the new compensation package is because he sold Biglari Capital and the Lion Fund to BH, and he would be giving up the potential income that he could have generated with his reputation from those businesses, for a $900K salary which he was now earning at BH. The problem is that in his hedge fund, the investors could pull all their capital if they were unhappy, and he would have to look to raise new capital from other investors. In the corporate structure, the capital is permanent...shareholders can sell their shares to others, but the capital Sardar has to work with is now permanent or captive. That means he can take a long-term view when allocating capital without facing large scale redemptions. That is a very significant advantage relative to managing capital within the hedge fund structure. If Sardar had a higher hurdle and lower incentive fee, then I would have less of a problem with the compensation plan. I think a 10% hurdle and 15% incentive fee would have been fair. The other issue that I think is very significant in a corporate structure, but not in a hedge fund structure is what effect will this type of compensation package have on the culture of the company. If I was an executive who worked hard for Sardar and helped manage most of the enterprise with him, I might have a real problem five-ten years down the road watching him reap huge incentive fees, while my work is rewarded with a fixed salary. This could create a problem with succession if something ever happened to Sardar. If you alienate all your best employees, who is going to run this thing if something happens to you? I think some of the top executives will want to go do the same thing at some point. At Berkshire or Fairfax, the CEO is paid far less than some of the other key employees, but they own a significant amount of the stock and votes. This culture tells the executive team that the CEO values their work, but leads them by example...if I'm working for $600K as CEO, then you should be happy with $1M a year! It may not seem like much, but it works. And with their large ownership stakes, it teaches the executives to be owners with shareholders, not simply employees. Little things, but they mean so much! Cheers!

It looks like the shareholder meeting for the compensation proposal is on August 13th, and is open to shareholders on record as of July 12th. Sardar said he was going to write the proxy circular himself, and he lays out his case. No mention of my biggest concern against the proposal...that the capital is captive inside a corporate structure. I'm guessing this thing will pass, but certainly it won't be anywhere as unanimous as it was on the name change. Cheers! http://www.sec.gov/Archives/edgar/data/93859/000092189510001065/pre14a07428_07062010.htm

Here's a very good article on Microsoft and some of their problems over the last few years: http://www.theglobeandmail.com/news/technology/microsoft-calling-anyone-there/article1628349/ I really think Microsoft is at a juncture where it needs to stop wasting capital on certain lines of products where they are not going to gain any advantage, like Smartphones, tablets, etc. Focus on their core business, including gaming systems, and possibly cloud computing, then redirect the cash flows into other lines of established businesses that are leaders in their fields already. There is nothing wrong with them taking equity stakes in younger versions of Google, Facebook, et al. It would probably be smarter than trying to develop these lines themselves, especially when they are not attracting the new, young, innovative minds that don't want to be involved with an old, established company like Microsoft. Cheers!

They're not mutually exclusive but if your going tech why not go with Dell which is much cheaper company and spits out more cash. I think Dell's business is going the way of Sears over time. Every facet has deteroriated over the last decade...margins, debt/equity, inventory turnover, cash flows...you name it. Microsoft's business has been impinged upon by the likes of Google, Apple, etc., yet the deterioration there is nothing like Dell's...infact in many facets, Microsoft has become far more efficient. I'm actually surprised Fairfax has so much in Dell. Cheers!

I don't really see Red Robin as having the same type of brand loyalty os Chik-Fil-A. While I'm not the biggest fan of Chic-Fil-A's food, they do have a bit of a 'cult' type following, similar to In-and-Out Burger. I just don't see that with Red Robin. I think Sardar's comments about Red Robin had to do with their sit-down style of burger restaurant and the execution on the customer service side. I would presume that he felt SNS could develop a cult-like following like Chik-Fil-A or In & Out, and the price-point was closer to where SNS would be. From everything I've seen, SNS does have a cult-following, but probably not as well-known or widespread as Chik or In & Out. What are the main things you like about Red Robin? With only a 6% stake from biglari, what type of role will he be able to play in any turnaround? I don't want to say too much about what I like about it, because everyone has to do their own homework on it. I think you should start with their cash flows...they are tremendous. The risks are that they have overexpanded, and unless someone starts cutting back and redirecting cash flows, you could see diminishing returns from those cash flows on the bottom line. We are already seeing that, and in this type of economic environment, Red Robin will have a tougher time since their price point isn't in the discount restaurant range. They also need to drive traffic back to their stores. I don't think they can do this with price increases and they actually need to go the other way. Cheers!