Parsad

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!

CIT is talking to advisors on what they could do without U.S. govenment intervention. I thought the interesting part of this article was exactly what impact a CIT failure would have on the manufacturing and retail industry. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=a_7Sejneng2Y

The U.S. Treasury has proposed legislation that will require hedge funds with $30M or more in assets to register and confidentially disclose holdings, investors, and off-balance sheet investments. Cheers! http://www.bloomberg.com/apps/news?pid=20601110&sid=aB4mwPcRiP1w

Here is CNBC's interview with Buffett in Sun Valley for those that missed it. Cheers! http://www.cnbc.com/id/31836625/

For those in Canada, you will have to watch the clip of the Daily Show at the Comedy Network: http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/july-14-2009/#clip192870 Cheers!

... suprised California isn't in there somewhere. I don't think they can afford to buy as much as before! ;D I believe what you really mean is that the highest consumption is in the most rural states. Well, I can understand Alaska, but wouldn't Montana, Idaho or Iowa be in that list then? I think you may be onto the massage parlour thing. I would suspect that Republican States are more strict on allowing businesses like massage parlours, escort services, etc, thus you have higher porn consumption through DVD's, magazines, internet, etc. Or it could just be Republicans like to get freaky more than Democrats! ;D Cheers!

I thought this was kind of interesting. Take a look at this CNBC slideshow. The top porn consumption states per capita just happen to be virtually all Republican states. Cheers! http://www.cnbc.com/id/31905302?slide=1 http://www-personal.umich.edu/~mejn/election/2008/

I'll be at the LA meeting. We had a group of about 20 people gather last year before the meeting. As we get closer, I'll put a post out regarding this year's meeting in LA. Cheers!

Some of the long-term Fairfax shareholders may remember our friend Fabrice Taylor. Taylor worked as a journalist at The Globe & Mail during 2003 when Fairfax was under attack by the shorts. Fabrice fully subscribed to the same theory propagated by John Hempton, Jim Chanos, Peter Eavis and John Gwynn. A couple of years later, Taylor decided to restart "Frank" magazine which would investigate and report on everything Bay Street didn't want aired. His venture was financed by powerful investors that the would not name. The magazine tanked and was out of business within a year! After that Taylor slowly made his way back to writing for the Globe & Mail. I was reading last week's copy of MacLean's magazine, and in there I ran across an article by Peter C. Newman on a fellow named Navjeet "Bob" Dhillon who runs Mainstreet Equity Corp. Dhillon for some time now has been spreading the word that he wants to be the first Sikh billionaire and that he's halfway there. Mainstreet is a heavily leveraged real estate company that buys up old buildings, refurbishes them and increases the rent on the units. Dhillon then refinances the properties and pulls the cash out. Think "Flip This House" but on steroids! Anyway, I had written about Dhillon on here before, but I couldn't believe that Peter C. Newman had given this guy publicity in MacLean's. While writing a letter to MacLean's, I found this article by Taylor written about a month ago, touting Mainstreet Equity's stock. http://www.theglobeandmail.com/globe-investor/investment-ideas/mainstreet-equity-an-astute-player-in-wests-apartment-rental-market/article1164277/ How Dhillon or Newman came up with the fact that Dhillon is halfway to being a billionaire, I have no idea. Mainstreet has no tangible equity, but the company is somehow valued at just over $100M. Dhillon owns 36% of the company, so on paper he is worth tens of millions. But he is nowhere near half a billion. In fact, there is no way in hell that I would value Mainstreet at $100M. I wouldn't pay a dime for it. I suspect it is only a matter of time before Dhillon's leverage catches up with him. We'll see what happens in the future, but I'm certainly glad I'm on the other side of the bet than Fabrice Taylor! Cheers!

I'm glad this girl is ok, but I still found it funny. What's disturbing is that the parent blames the city and not that her daughter was too busy texting to pay attention. Cheers! http://www.cnn.com/video/#/video/us/2009/07/13/wabc.sewerfall.texting.wabc

Mohnish had a very tough year and a half from October 2007 to March 2009, but all three of his funds bounced back tremendously in the last three months. Every Pabrai Fund was up over 50% for the last quarter, and they are all up at least 49% for 1st half of 2009. He also had his lunch with Munger on June 9th, and it was longer than his lunch with Buffett...the Munger Lunch lasted 3 hours and 17 minutes! I'm guessing someone kept time! ;D Here's a terrific quote from his letter: I feel incredibly blessed. I happen to be alive when my heroes are alive. Neither lives very far from me. And one of them was willing to accept a bribe to meet up and share a meal. The second one cannot be bribed, but agreed to while away an afternoon with me anyway. Lunch with Warren and Charlie will always rank highly on my list of amazing experiences life has dealt me. The boy born in Bandra in Mumbai never expected life to turn out so well. Cheers!