Parsad

One of the great strength of Warren Buffett is not to be impressed by the recent past. For instance the fact a stock was at 4$ a couple of months ago does'nt mean necessarely that it is not a bargain at 10$ or 15$ (See Singleton too). In 1950, Even his mentor was pessimist but Buffett bought because he looked forward and not in the rearview mirror I think the greater tragedy is when investors become transfixed on a company. I'm more attached to Fairfax than anyone on this board, other than those that may work at HW or are directly related to employees there, but regardless of who is running a firm, investors always have to weigh return in value relative to market risk. In 1950, circumstances had changed significantly compared to a decade earlier. What exactly has transpired in the past 12 months that makes people think that we are past tough times and a renewed optimistic view is warranted of market prices? I just read the quarterly letter from the Baobab Fund, whose manager happens to be an analyst at Hamblin-Watsa. He certainly doesn't believe a rosy scenario is in the works. I don't know if those sentiments are shared by the rest of the team at Hamblin-Watsa, but it might be interesting to see exactly how much of their equity position Fairfax has taken gains from when the report comes out next week. I'm not quite as bearish as Martin, but I think things will get tougher for a lot longer before they get better. We may not see the lows of the recent past, but we will most certainly tread deep waters over the next couple of years. Cheers!

QUE? I guess it depends on whether your implicit goal is wealth creation or maintaining wealth...long term wealth creation usually comes from concentration of assets. And if the goal is wealth preservation, you'd be perfectly fine putting 40% or more in Berkshire at these prices... It's all dependent on the individual's tolerance. As I mentioned, if he's comfortable holding long-term and can handle the volatility then that is fine. I'd beg to differ on the definition of wealth creation and wealth preservation...they are intertwined...you cannot have long-term wealth creation without wealth preservation in mind. Concentration is only useful if the assets are undervalued. Unfortunately, we have 680+ members, and I would say that their psychological make-up, regardless of how much Ben Graham they've ingested, isn't probably that far off the psychological representation of the general public. There were alot of people on this board who weren't interested in WFC at $9 or GE at $7. Even after everything Buffett said, they still weren't interested. How many here wanted to buy Steak'n Shake under $5? You can probably count them on one hand. I remember alot of people who did not want to touch Fairfax at $60 a share in 2003. At $360 a share, Fairfax is no longer the deep-discounted value stock most of us have owned in the past...neither is Berkshire at $100K compared to what else is available. They are businesses that are in great shape, and their market value is representative as such. As Francis said last year, never underestimate how cheap things can get. Cheers!

Be careful Valuebuff! It's not a 40% allocation stock right now (are there any?), unless you are comfortable with volatility and consider holding it for the long-term...or your name is Prem Watsa and you own the company. Cheers!

Fairfax should complete the merger in short-order and delist ORH. Cheers! http://www.sec.gov/Archives/edgar/data/915191/000095012309052126/o57503a6sctovtza.htm

I think with Fairfax, the institutions that bought up the offering at $345 or whatever, have finished flogging them to their clients at $360+. Cheers!

Warren attended a special ceremony at George School, where David Dodd's daughter Barbera dedicated a new library. You have to go about half way through the presentation to get to Buffett's speech. Cheers! http://www.georgeschool.org/NewsAndEvents/Dedication%20Ceremony%20Press%20Kit.aspx http://www.philly.com/inquirer/local/20091018_George_School_donor_appears_with_Warren_Buffett.html

Good article in the NY Times. Cheers! http://www.nytimes.com/2009/10/17/business/17nocera.html?_r=4&8dpc=&pagewanted=all

Hi Savant, Unfortunately the interview was delayed due to personal and business time constraints for Amitabh, but we expect to redo it at some point in the future. I've also been quite busy, but I'll try and put together another interview with someone else in the next month as well. Thanks!

Yeah, that seems more congruent to me. What was Greenblatt's actual hedgefund results when he operated one relative to the S&P500? And did he use any sort of leverage or hedges? Did he short stocks? How much cash did he carry? The one set of numbers that I think weigh both return and risk is Seth Klarman's. I'm sure some of you have his numbers, but for the last decade, he carried huge amounts of cash and still killed the S&P since inception. Anyone have Lou Simpson's numbers over the last few years since Buffett posted his numbers in the BRK annual report? Cheers!

Another name I often hear these days is Joel Greenblatt and his magic formula investing. I'm no fan of these types of investment philsophies, so I'm naturally very skeptical. I found this article discussing how magic formula would have done last year: http://www.magicdiligence.com/articles/how-is-joel-greenblatt-performing I'm sure Joel's partners over the years can attest to his success, but again, I'm wondering exactly how the returns were generated...concentration, cash positions, hedges, leverage, currency bets, etc. Cheers!

Sorry guys, I went back and looked at the original post and noticed there was a graph there showing Paulson's performance. I actually used that graph and recalculated his numbers from 1994-2006, before he enjoyed the huge gains from his macro-bet. His annualized return over 12 years was around 15%, while the S&P500 would have been about 10% during the same period. So yes, his numbers before his macro-bet were significantly lower and on par with many other excellent managers. I still would like more details on Brookdale. Unfortunately, I think making these types of lists are hardly ever an apples to apples comparison. Short-term events, leverage, etc often are the reason. Long-term, I think the actual disparity and margins between the best managers is far narrower than most investors think, especially when you equate the types of holdings, regionality, cash, concentration and such. Cheers!

Hi Ben, that's what I originally thought, but Paulson must have done better than 3 times the market cumulative since 1994. Bruce Berkowitz at Fairholme has done 4 times better since 2000, so there's no way Paulson has only done 3 times better since 1994, unless he had very low returns previous to the last few years. Cheers!

Hi Mpauls, Can you clarify? Paulson did 17% and the markets did 8.8%...isn't that 2 times better, not 3? Also, what are Brookdales numbers like and how do they operate their fund? Cheers!

Galleon has two funds on that list. The founder has been charged with insider trading, along with five other people. Buyer beware! Cheers!

Fairfax files amendment to original filing on lawsuit, and gives more detail about the judgment against Capgrowth. Cheers! http://www.sec.gov/Archives/edgar/data/915191/000095012309050993/o57491sctovtza.htm

Excellent point! We should ask David Letterman the same question. ;D Cheers!

Fairfax's 3rd Q results come out after market close on October 29th, with a conference call to follow the morning of the 30th. Cheers! http://finance.yahoo.com/news/Fairfax-Announces-Conference-iw-4280660897.html?x=0&.v=1

The injunction asked for by Capgrowth Partners regarding the ORH/FFH merger has been denied by the judge. Cheers!

And the list keeps rolling... Insider trading charges against Galleon founder: http://www.cnbc.com/id/33343625 Cheers!

Another long-running Ponzi scheme...this one in San Francisco. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/10/15/BARS1A6AMQ.DTL Last Friday, some company called "Cirplus Futures" was shut down eight floors below us. I believe it is also another fraud or embezzlement. Crazy! When the tide goes out...Cheers!

although they are very senior and its unlikely that I will ever meet them Anyone can meet Prem briefly at the Fairfax AGM each year in Toronto, and all you have to do is look for the big, tall Indian guy in Omaha each year to find Mohnish. Ajit Jain is a bit harder, but you can usually find him in Omaha as well. Cheers!

Successful or not...I think BYD may very well be another venture that Berkshire is stepping into that contradicts what they've said in the past...airplanes, technology, derivatives, etc. Capital-intensive, few moats, weapons of mass destruction, etc. Cheers!

They seem to have a track record long enough to show that they can perform in good times and in bad. You're correct, but it only takes one mistake to wipe out a string of successes...especially utilizing leverage. Cheers!

On the side note - Does anyone know, which IIT Prem went for his undergraduate? Prem went to IIT - Madras. Interestingly enough, Ajit Jain went to IIT - Kharagpur. Neither knew each other during their university days, but got to know each other through the insurance industry. Funny, how one single-handedly made more money for Berkshire than anyone except Buffett, and the other did the same at his own company. Both are true gentlemen as well. Cheers!

You should ask yourselves how much leverage (if any) was used, and were there outliers? Claire Barnes is a terrific manager, but some of that result is from being in the hottest market over the last decade. Paulson almost certainly uses some leverage and had the outlier of making a killer return the last two years betting on the demise of the credit bubble. Cheers!