Parsad

Thanks Prevalou! I was just repeating what the article stated. Cheers!

Bloomberg article on regional banks and their CRE loan portfolios. Of the 35 largest regional banks that retain TARP funds, CRE loans account for 30% of their portfolio on average, compared to 9.5% for large national lenders like Citi or Wells! Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=aaoaOoxV9AmU&pos=10

My mentor is a family friend from Ireland (where I live). He started off smaller than 100k, withdrew profits as he went along, so he hasn't got anywhere near the figures you're all quoting. There's no point me mentioning his name because he's never done anything in the media and only ran money for family. He was probably lucky to have been investing during the historic 90's bull market, but then again, Buffett was also investing in a similar bull market at the start of his career. Buffett's withdrawn a signficant amount of capital over the years that could have remained in the businesses...especially during his partnership days. He's taken a meagre (relative to his wealth and what he could have received) $100K a year salary. Yet Buffett is one of the richest men in the world. I'm actually surprised by how much Buffett used to hand over to his wife and children over the years. He's got a reputation as a cheapskate, yet I don't personally know anyone who was giving each of their three children $1M a year since their 30th birthdays or so, as well as their own personal foundation to do with as they wish, not to mention Berkshire shares. And he built it with $100 of his own money. I'm sure your mentor has done very well and has a great track record, but it isn't public or audited, so we can pretty much lump it with other unconfirmed accounts of investors who've done better than Buffett. I'm sure there are plenty of people out there who no one has ever heard of who have even better records. Perhaps, but I've yet to hear or see one that has done it over fifty plus years. I hope someone does it...perhaps my mentor - Prem...but it's quite unlikely. Cheers!

Terrific little article on Rodriguez. Cheers! http://www.bloomberg.com/apps/news?pid=20603037&sid=arQR.jbVgmFE

If they take SAC down, they will take down a whole host of others...perhaps even the Sith Lord(s). Cheers!

What did you learn from the Crash and rebound? Have the right mentors, otherwise one mistake can wipe out years and years of success. I'm eternally grateful that I have the likes of Prem & Francis as my mentors. Not only are they great businessmen and investors, but they are exceptional human beings. It certainly helped form the correct framework (both intellectually and culturally) when Alnesh and I started our own firm. There is no other way we will now behave for the rest of our lives after experiencing this period. Cheers!

Wealth and fame seems to be the most effective aphrodisiac available for the female half of our species. Its easy to be moralistic however as us mere mortals do not have any moral dilemas to deal with in those matters as we are completely ignored by the fairer sex. Speak for yourself! They never ignore me...they just turn around and walk away once I open my mouth! ;D I suspect that deep down that behind many of our efforts to attain material wealth is a secret desire to have Tigers problems. No doubt and I don't say that he can't eat his cake...just that he can't have it as well! Whether you have Tiger's problems or our mere mortal problems, that rule never changes. I just think that if a man or woman wants to sample the wares outside of his/her marriage, then be up front about it, seperate, get divorced and be on your way. It's the behind the back stuff that bothers me...no different than a CEO betraying the trust of his/her shareholders by padding their expense account and compensation package while the company goes under. Cheers!

And the biggest thing that pisses me off about what Tiger did, is how all those hoser Mickelson fans are going to be gloating all the way to next year's Masters! I won't be able to watch a golf tournament, with Tiger and Mickelson, without wanting to wipe that goofy grin off of Mickelson's face. It was so annoying before, it's going to drive me crazy now! ;D Cheers!

Tiger would prefer to move to Canada right now. I don't want Tiger in Canada. Keep him there! I'm so disappointed...first Letterman and now Tiger. Two guys I always loved to watch and thought they were moral stalwarts. Why can't these guys just get a divorce or breakup with their girlfriend and then go do whatever the hell they want? Wouldn't that be much easier for everyone involved? Just plain stupid. I can't look at either right now...especially Tiger...his wife is something to look at and he traded down to those wenches. If I hear anything about Peyton Manning, then I'm finished watching television for good! Cheers!

Hi Arbitragr, I'm still very, very bearish on commercial real estate. This isn't for us. A client of Quantum's is interested in setting up such a structure to purchase residential real estate in Las Vegas. I'm not against that idea per se, as I think residential real estate has come down alot and will take time to recover, but the simplicity of the structure they are seeking becomes complicated, as it's deficient in many areas such as liability and tax efficiency. Cheers!

Broxburn, I think most boardmembers are ready to hurl a frozen deep-dish pizza at your head! ;D Enjoy the weather. Cheers!

Value, do you really like the deep-dish stuff? I went to a well-known place downtown called Giordanos. It was good, but I like my pie flat and with a nice soft, chewy blistered crust...Brooklyn style! Cheers!

Al, You're going to have to take me to some comparable burger joint in April then. Otherwise you guys lose to Chicago. There is a pizza joint in Toronto I'd like to try next time...Pizza Liberetto I think it's called. I just read about it on the weekend. Cheers!

Hi Crip, I agree with you. Everyone is always saying Toronto is a New York wannabe, but I really think it's alot more like Chicago with the lake and slightly smaller downtown area. I've got to say though that downtown Chicago is beautiful...it's a hell of alot nicer than downtown Toronto and I actually prefer it to Manhattan. The whole Millenium Park area and the views of the Chicago skyline from there are absolutely stunning! Plus you have Steak'n Shakes! I think the only thing Chicago loses out on is their deep-dish pizza. I much prefer New York style pizza over Chicago deep-dish. ;D Cheers!

The cheapest and most efficient structure must also contemplate the human/relatives factors involved in what you describe. I would recommend the Canadian Corporation with shares issued to each member with restrictions (if any) clearly spelled out in bold including the mechanism for redeeming those shares if need be. All kinds of things can come out of the woodwork when in business with friends and family! Unfortunately the Canadian corporation structure is the least tax efficient. For every dollar in income, only 25 cents will make it to the pockets of investors after taxes, due to double taxation of dividends and personal income taxes. Because there are so many friends/family the core legal entity should be a Cdn Trust, where everyone owns 'units' that they can buy/sell. The Cdn Trust contracting for services (Admin/Acctg, Ppty Mgmt, etc.) & your admin/acctg involvement is via a seperate LLC of your own..... But frankly, the better option is simply a direct investment in the various public REITs (liquidity, diversification, admin, etc). Yes, the trust structure is the best structure and what we originally told them, but the problem is that they are raising only a small amount of capital...$300K-500K. The administrative, custodial and compliance costs are going to eat into their capital. If they were going to use the capital as the 25-30% down payment and then leverage up through mortgages, then you could justify the costs of the trust, but they are buying the homes for cash: Cash: $300K in properties...double in price over five years (only a best case assumption)...$600K - $30K in admin/compliance costs + $20K in operating expenses...$550K/300K = 83% return or about 12.5% annualized. Leverage: $300K in down payment and $600K in mortgages...double in price over five years (again only a best case assumption)...$1.8M-$600K in mortgages...$70K in interest costs + $30K in admin/compliance costs + $20K in operating expenses...$1.08M/$300K = 260% return or about 21.5% annualized. I think you could justify the trust structure cost based on the potential return in the leveraged scenario, but not the way they want to do it with cash purchases. Cheers!

Even Carl's Jr isn't that expensive. That being said, I will definitely go try it once they open. Cheers!

Thanks for trying Netnet. Some answers to your question: I'm U.S. based, so I have not thought about the Canadian implications, but here goes: 1) Why do you need the Canadian structure? Actually it's a client who wants to set it up. They don't care except they want the cheapest, most efficient structure...unfortunately cheap and efficient don't necessarily go hand in hand. 2) Is this to be widely cast to a variety of investors or are they all ready to go now? Most are ready to go, and they are primarily friends and family. They aren't raising capital from outside investors at this stage. 3) How many investors are there? About 10-12 4) Are they deemed sophisticated? About half would be, but the other half would have to qualify under a friends and family exemption. (If you can legally set up a CDN corporation, with all the investors--option 1--, I'm surprised that there are no CDN compliance issues.) In BC, it's pretty easy to set up a corporation operating under certain regulatory exemptions that allow capital to be raised freely from friends, family, associates and accredited investors. Off hand, I would tend to #2, with or without the Canadian entity. If there are compliance issues, then set up a US LLC, which allows you to upstream the profits tax free to the members, but you still have the foreign entity tax treatment issues, which is way beyond me. Unfortunately, the LLC structure isn't recognized by Canada, thus there are certain timing issues in relation to how operating losses can be passed up to the investors...in essence, the LLC structure is viewed as a corporation in Canada, thus operating losses cannot flow through directly to the investors. Cheers!

Sanjeev, Its ok to give them $999,999,999.99 but a billion is too much I agree I would have put a significantly lower amount...about $50M...but I wouldn't want half the board calling me a socialist! ;D This way I alienated only about 3-4 people on this board! Cheers!

Got a question for boardmembers and I thought I would tap the brains of the best, since most of the senior partners, CPA's, CA's and lawyers we've questioned haven't got a real clue: And no, this is not for us...we have no interest in doing this! If you were setting up an investment structure for Canadian residents to invest in U.S. distressed real estate, what is the best structure when considering compliance, taxes and reporting? 1) A Canadian corporation holding the property directly...seems to be very inefficient taxwise. 2) A Canadian GP that sets up a U.S. LP with Canadian investors investing directly into the U.S. LP...more tax efficient, but could have considerable compliance issues. 3) A Canadian corporation with a wholly-owned U.S. corporation that invests directly into the U.S. real estate...probably the least efficient of all structures due to double taxation 4) A Canadian GP that sets up a CDN LP with Canadian investors and then the CDN LP invests directly in the U.S. real estate...seems as efficient as #2, but has more compliance issues and tax filings issues for partners...since both a K-1 and US 1065 would have to be issued. Would be interested in hearing from you guys on these or any other alternatives! Cheers and thanks!

Inherited wealth is one of the great sins of capitalism. I think people should be incentivized to do all they can for themselves, but passing capital from one generation to the next is the antithesis of capitalism. Capital should move freely to where it is most efficiently utilized...inherited wealth does the complete opposite. I'm all for egregious estate taxes for estates over $1B that are passed onto the third generation. Cheers!

Thanks for perking up my day KFR! ;D Cheers!

I had my first experience at 5 Guys yesterday. Needless to say the bill was a little under $10 for a burger, fries, and drink. In my mind SNS is 10xs better for half the cost. Wow! That's steep. Vancouver's local burger chain that's been around for 70 years is Whitespot. You can get a Whitespot burger with their "triple-O" sauce, unlimited fries, coleslaw and a drink for about $7 CDN. Take a look below: http://imonlyhereforthefood.com/images/Food/WhiteSpot/WhiteSpot002.jpg Unfortunately Whitespot is trying to change with the times, and they have widened their menu and created more full-dining locations, while also creating more standalone type locations that focus on the core burger menu. I'm sure they've increased revenue, but they've probably done some damage to the brand. I was a die-hard Whitespot fan, but go there increasingly less for the last few years because of the widening menu and the full-dining focus. Burgers are really comfort food and companies can hurt their brand by losing focus on what got them to where they are. If Five Guys pricing in Canada is anything like what CONeal experienced, I probably won't go there that much, and I would suspect alot of people won't. By the way, for those people who have tasted a Whitespot burger and swear by it (or an In-N-Out burger for that matter), I can tell you for a fact that a Steak'n Shake steakburger is actually tastier. And that has more to do with the flavour of the patty rather than anything else. The steakburger patty while thin, is one of the most flavourful patties I've tasted in the lower-tier ($7 or less for a burger) burger market. In fact, for the price, you can't get a tastier burger...especially the double steak-burger! Cheers!

The other thing I've noticed about Five Guys from pictures is that their menu seems to be priced around Fatburger but it's well above the prices at Steak'n Shake or In-N-Out. You can get a single-patty Steakburger meal for $2.89, while a Little Burger (single-patty) with fries and a small coke would run you close to $7 at Five Guys...although they don't have a small fries and Coke, so you would get the regular sizes. Still a single-patty Steakburger with regular fries and drink would be about $4.50 or less! The same meal at In-N-Out would also be about $4.50. It's actually quite hard to spend more than $7 at Steak'n Shake. For that you could get a double-patty Steakburger, fries and a large Chocolate shake! I think Sardar's been very smart about pricing and providing value to customers. That's why traffic numbers have risen so quickly. Cheers!

I'm not sure what you are referring to Tooskin, but is it the free peanuts they offer or no coupons on their products? I've never been to one, so I'm not sure if it is part of the greeting or something in the design of the store, if it isn't the two things I already mentioned. Surprisingly, the interior of the stores don't look entirely different than a Steak'n Shake. One of the most obvious similiarities is the three-square checkerboard pattern that adorns the interior of both restaurants. Steak'n Shake's is black, while Five Guys seems to be red. Steak'n Shake seems to be adding certain menu items that are similar to the Five Guys burgers...BBQ & A-1, as well as the Jalapeno topping and mushroom topping on the short-term specials offered by Steak'n Shake. Both companies seem to make the double-patty burger the standard as well. I'm looking forward to it when it opens. Cheers!

Well, I guess my desires for a Steakburger will have to be satisfied once a year in Chicago! Fortunately, cult-chain Five Guys Burgers is opening a Canadian store in Vancouver, and hope to have 200 open in Canada over the next decade or so. http://www.kelowna.com/2009/11/27/obamas-preferred-burger-joint-setting-up-shop-in-langley-five-guys-opens-in-january-with-further-outlets-planned-for-metro/ Are you listening Sardar? Get on it! Find a great Canadian franchisee for Vancouver...or at least Seattle...since Five Guys and In-N-Out aren't there yet. Cheers!