Parsad

I think they are both correct, but Sprott is probably selling it harder due to his stance. I think we are in for several tough years. We will probably see the theoretical end of the recession by year-end, but that doesn't mean the economy has recovered. It's only a statistic that it would have ended. This morning the Bank of Canada reported that the recession is over in Canada...phhhppphttt! Consumers will be strapped. The psychology will change for a while. Budgets need to be balanced, debt repaid, jobs created. We'll go through months where things will look great, and then months where we will lose ground. And it will go like this for several years. But while that is happening businesses will become healthier, economies will strengthen. We'll come out great in the future, but the heart patient now has to go on the treadmill and lose some damn weight. Cheers!

Bloomberg article on the Goldman-Sachs investment. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aYzyTHHjhsJQ

In the webcast, Patrick takes some funny shots at Sam Antar who sent in some questions. One of the more detailed webcasts on OSTK's operations. Things are moving in the right direction. Cheers! http://seekingalpha.com/article/150637-overstock-com-inc-q2-2009-earnings-call-transcript?source=yahoo&page=1

While the size of the profit is just a baby-step, Overstock is finally moving in the right direction by reducing overhead and increasing gross margins. They also bought back about $7.2M of their debt at discounted prices this year. Shorts can kiss my derriere! ;D Cheers! http://finance.yahoo.com/news/Overstockcom-Reports-Q2-2009-prnews-2559904460.html?x=0&.v=1

Taxpayers got a 23% return over six months on Goldman Sachs repayment of bailout money. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=a6pS.2Pr7bdQ

He rolled over. You can tell from the judge's comments, and that the U.S. attorney requested the case be dropped, that Contougouris cut a deal. Cheers!

Hi Hawk, I was just clarifying how HI, TW and HOA were related to one another, and exactly which party is which, since it sounded like there was a bit of confusion in Bargainman's post. I can't comment more on that regarding the note or the merger contracts. Suffice it to say, we aren't selling our shares and have no plans on selling them anytime soon. Patience is often rewarded, and you sometimes have to trust the ability of management to see the process through. That's what happened at Fairfax over the last few years, at Steak'n Shake in the last year, and we expect our managers at Chanticleer to get the job done over time. Cheers!

A few of you scare me with all that cash. No one knows when and by how much, but we are certain to have above average inflation. The purchasing power of your cash holdings will effectively be taxed by an amount equal to the difference between the interest rate on cash and the inflation rate. You are correct to worry about elevated inflation Mpauls, but I don't think most of them will hold cash for any prolonged period where the value of their dollar will erode significantly. They are mostly just biding their time waiting for the next fat pitch. Cheers!

My two reservations are these: 1. Does he love money or does he love business? It's ok if he likes the money, but he has to love the business...malcolm gladwell type of love. This is hard to measure. Both! Even Buffett loved the money immensely. He wasn't by any means high maintenance, but he loved the money. I'm sure Biglari loves the money as well. But I assure you both love the game more, as do many other managers including myself. 2. Will west have the same capital allocating opportunities as brk? Brk invented the game which spawned lots of competition for west. I doubt west will be as lucky...but predicting the future is probably trickier than understanding sardar's personality. Probably not. You are correct that there is significantly more competition now. But it doesn't take a whole whack of ideas to do well. As long as Sardar can come up with one or two great ideas every year or two, he will do very well. The other thing is that the period we are currently going through, may create some significant opportunities for Sardar that were comparable to what Buffett was seeing in the 80's. Maybe not quite that cheap, but I'm certain we will see plenty of opportunity over the next several years. Cheers!

I read the old Buffett Partnership Letters again on the weekend. If you read the letters along with the corresponding chapters in Alice Schroeder's Snowball, you get a very clear picture of what he was doing. Much of it also aligns perfectly with what Sardar is doing...Sanborn, Dempster and then finally Berkshire Hathaway all look eerily familiar to what happened at WEST, then Friendly's and finally Steak'n Shake. Although the outcome at SNS has been far better than the early days of the Berkshire textile business. Even the teaming up with various other "associates" to increase their controlling stakes is very similar, but that probably has more to do with working with small amounts of capital. - Sanborn was targetted for their investment portfolio, while the map business was free...WEST's restaurant business was flailing, but Sardar developed the investment portfolio within the business by raising capital from existing shareholders. - Dempster was targetted for the sum of the parts and then sold off...Friendly's was targetted for the sum of it's parts, but then acquired by someone else with Biglari's approval for a nice fat profit. - Berkshire was more of a personal vendetta because the company was so poorly managed and the CEO undercut Buffett's offer price to sell his shares...Biglari wanted Gilman gone because they had done such an awful job the last few years, while doing everything to protect their own asses - it had also become very personal. While many on the board suggest that Biglari is no Buffett, I see far more similarities between the cut-throat young Buffett of the partnership days and the young Biglari we see today. There won't be another Buffett, but Biglari is doing a very nice job of following the playbook! Cheers!

The Governator made it happen. Cheers! http://www.cnn.com/2009/POLITICS/07/20/california.budget.crisis/index.html

Article at Forbes on Hoisington. Cheers! http://www.forbes.com/2009/07/20/economy-bonds-deflation-business-recovery.html

I think this goes back to what Sam Mitchell said at our dinner this year..."Sometimes macro does matter." Cheers!

Also here: http://www.sec.gov/Archives/edgar/data/1106838/000114420409028984/v150530_8k.htm it looks like their plan to buy all of Texas Wings Hooters 45 stores was terminated. On the other hand it looks like they are acquiring Hooters? http://www.sec.gov/Archives/edgar/data/1106838/000114420409024044/v147997_10q.htm To clarify on your question: Hooters Inc (HI) and Texas Wings (TW) are different than Hooters of America (HOA). Hooter's was founded by the group at "HI", which in turn sold the rights outside of Tampa, Chicago and Manhattan to "HOA". "TW" is one of the largest, if not the largest franchisee, which purchased their rights for Texas from "HOA". Chanticleer's acquisitions were with "HI" and "TW", but not "HOA" which the bulk of the Hooter's restaurants fall under. The restaurants under "TW" and "HI" account for 12 of the top 20 highest-grossing Hooter's restaurants, and the average profitability of "TW" and "HI" restaurants are far above the median Hooter's restaurant. Now the note that Chanticleer issued to "HOA" when former "HOA" CEO Robert Brooks was in charge, which was renewed for another year (below), gives Chanticleer the right of first refusal on any offer for "HOA". Thus if anyone ever wants to buy "HOA", they have to go through Chanticleer first. http://www.sec.gov/Archives/edgar/data/1106838/000114420409030516/v151386_8k.htm Since the note was renewed for another year at a higher rate, you can come to some conclusion on whether they have the funds to remain a going concern. Cheers!

Hi Mhdousa, My situation is kind of different than the general public. It's probably the same for many of the managers I've mentioned, including Mohnish. Generally, we don't invest with other managers for a few reasons: 1) We trust our own instincts and investment philosophy 2) We generally know that there is no way we'll screw ourselves over, whereas there is always the possibility someone else may 3) We want our partners to know that we have our own capital invested with them 4) It is more cost efficient for us to manage our own capital, as we can control trading costs, position sizes and other administrative costs 5) We get a cut of our own profits when we've invested in our own fund, whereas that incentive allocation would go to another manager 6) Depending on where we live, we may not be able to invest with managers in certain jurisdictions, unless we invest through one of our subsidiary companies There are many good managers out there, and many are my friends. I don't like to tout any one single individual, but I will make one exception, as it will be pointless to invest in his fund since he probably won't take any new money. Due to his age (31), abilities as an investment manager(beaten the S&P500 by 17% annually for the last nine years), entrepreneurship (a couple of businesses), operational and leadership skills (TLF, WEST, SNS), and track record to date, Sardar Biglari ranks right on top! He's simply as impressive as they come and he's executing his playbook flawlessly. To put it plainly, I don't believe I know anyone who has bigger balls! ;D I didn't really think much of him the very first time I met him, but over the years I've watched him very closely, spoken to him on many occasions and studied every little detail of his investments...the guy is the real deal. I'm sure there will be people who will stay stuff, and he will make mistakes where people will jump on it, but they did the same thing to Buffett, Prem and anyone else who aspires to great things. In 10 years, we'll be talking about him like Prem Watsa or Eddie Lampert. Cheers!

Hi Folks, If you've recently upgraded your Microsoft Internet Explorer to Version 8, you may have a little difficulty when posting messages. To remedy this, on your open internet explorer page showing the message board, click the little "cracked page symbol" right next to the explorer URL bar. This "cracked page" will allow Explorer 8 to work properly with websites created for use under Explorer 7. Once you've clicked that symbol, you will find that the page view and posting all work like normal going forward. Cheers!

On the weekends, I like reading all sorts of things. Often, I'll go back and look at old partnership letters, annual reports, etc, of the people I admire. I read the original Buffett Partnership letters AGAIN! ;D And then re-read the first few years of Fairfax's business. In particular, I carefully scrutinized the 1st Annual Report, which was still under the Markel Financial Holdings name. http://www.fairfax.ca/Assets/Downloads/AR1985.pdf In the letter, Prem has the breakdown of the capital that was injected into Markel when they acquired it: $5M - The Sixty-Two Investment Company $2.6M - Markel Corp $1.5M - Private Investors I was thinking about that $5M. I remember Prem telling me the whole story over lunch, and for him at the time, it was very, very difficult to raise the capital. He had every cent invested in this deal...for him and his family, it meant all or nothing! Robbert Hartog of course was one of the private investors. Francis was in there as well. It's amazing the confluence of events that lead to Prem meeting the Gardiners, then Tony Hamblin, Francis, Robbert, the Markels, etc. In the letter he goes on to tell the shareholders: Our investment philsophy is based on the value approach as laid out by Ben Graham and practiced by his famous disciple, Warren Buffett. Remember this was only 1985 and Buffett’s net worth was a little more than Prem’s today in dollars. Granted in 1985, $600M was probably like $2B today. Prem talked about his 20% return on equity objective. Milton Markel remained the Honorary Chairman, Steve and Tony Markel remained as directors, and Prem became Chairman. They had about $42M in total assets and a little over $10M in equity…primarily from the $9M injection of capital when they took over. Equity per share was about $2 and they had 5,000,000 shares outstanding. Twenty-Four years later and look at what has happened. That little business, not entirely different than when Sardar put half of the Lion Fund into Western Sizzlin, is now a behemoth with over $4.5B in equity and the shares outstanding have only tripled. Today, the Markels run their own very successful company, Tony Hamblin and Francis have done pretty good to say the least, not to mention all the other principals at Hamblin-Watsa, and little old Prem Watsa…well his dividends alone now annually generate more than 3-4 times all the money he had to scrape together to buy Markel in the first place. Wow, what a story! Cheers!

CIT managed to restructure its debt with its bondholders over the weekend, and bought itself some time. I'm just wondering exactly why and how the government is deciding on what businesses to save by bailing them out, and which ones they are telling that we can't help you so you're on your own? Let the conspiracy theories propagate! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=a27vvkQWJqg8

After some bad blowups (DFC) and a supposed change in his investment style towards less concentration, what are people's thoughts towards Pabrai and his funds now? He has reduced his minimum to 1m. Would you invest your money with him? Obviously I'm a bit biased, but I have no problem recommending Mohnish as an investment manager. You should be prepared with volatility with any investment manager that focuses on equities, and Mohnish's partners who joined in the last couple of years probably wish they had waited, but long-term he will do very well...he's a bright and humble guy. He's also my friend, but I don't think he needed to change to a less concentrated fund. He rebounded 50% in the last quarter, and I would suspect if he had stayed the course on his old philosphy of a concentrated portfolio, the rebound would have been even higher. But an investment manager has to do what he is comfortable with, and a more diverse portfolio gives his partners more comfort. The volatility in his fund would have probably scared off the more recent investors (last 2-3 years), but the ones that have been with him since the early days understand the fund and they've enjoyed better returns over the long-term. The problem is, that a more diverse portfolio doesn't necessarily reduce volatility, if you continue to have correlated risk or you have a broad market decline like we saw in 2008. Ask Bill Miller or a host of other managers who had greater than 20+ positions. The problem was correlated risk and not enough cash holdings, not the concentration of the portfolio. I'm very impressed with his fee structure (as far as I know, the only fund still using the old Buffett structure). No, there are a number of funds that use the same fee structure these days. The Lion Fund, Dardashti Capital, Braewick Capital, Lindmark Capital, Chanticleeer Advisors, Pacific Vista, us at the MPIC Funds...the list goes on and on! Cheers!

Terrific article by Michael Lewis on AIG! Excellent stuff! Cheers! http://www.vanityfair.com/politics/features/2009/08/aig200908?currentPage=1

Get used to it, as they'll be doing it every year for the next 20 years. Cheers!

I see quite a bit of optimism everywhere, but I'm finding it difficult to believe that consumers in general will be eager to spend over the next few years. In particular, those that fall into the category of 8.3M homes where their mortgages are worth more than their property! I remember MPIC did a presentation in Bakersfield, California in October of 2006, where we provided a slide of the negative savings rates for Americans in 2005...something that had not happened in over 70 years. I think Americans have already begun their unprecedented swing to the positive side of the income statement and they will remain frugal for some time. These homeowners will be telling their story of how they lived through the Great Recession and nearly lost their home, just like I used to hear tales from people who lived through the Great Depression! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aGKKaIPgvnDk

Article discussing Berkshire's failed cash bid for IPC Holdings. Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=aUEV5ZIEFL3s

More details: http://www.cnbc.com/id/31927126 Cheers!

Some more chapters released from Mark Mitchell's Dendreon story: Chapter 9: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-9-of-15/ Chapter 10: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-10-of-15/ Chapter 11: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-11-of-15/ Cheers!