Parsad

Never bizarre. How many times have we made money when Fairfax was undervalued? Or Northbridge...or Odyssey Re...this is the gift that keeps on giving. As long as you understand the business and can value it properly. Prem bought $150M of stock in the depth of the market with his personal money. Not hard to figure out the stock might be cheap and eventually would be priced properly by Mr. Market! Cheers!

Food for thought, Ben Watsa's Marval Capital was up 25% in 2020. He owned iRobot at an average cost of $46 and sold during the whole AMC/GME Reddit bubble at $167. If Ben sold his iRobot position, hopefully Prem was able to monetize the Blackberry position in some manner when it was crazy too. This is one FFH quarterly report and conference I am looking forward to in a while...should be very interesting! Cheers!

Chen has a fiduciary duty to do what is right for his shareholders. Doing a giant stock offering is not in those interest, agreed, but i think there is happy medium where he can re-fuel his capital allocation tank and that would serve his shareholder and himself just fine. And that would greatly benefit Blackberry, its sets of optionality, and by extension its long term holder. At current valuation of $7 billion, he can raise $1 billion or less at current price. That would ~60 or so million shares. I think BB outstanding shares is 562 million. So 622 million post offering. 10% dilution for additional optionality is worth it. Money needs to be raised when you don't need it (And i think BB needs it) and when cost of equity is lower, ... not when you really need it and desperate for it. If the latter, than Prem Watsa is going to get more good deal with more convertibles. That would make me, a FFH shareholder and no longer a BB shareholder, happy, but at the same time there is limits to that, given that Prem is also a long term owner of the common shares as well. And if he really believes in that, his intention shouldn't be extracting more cash flow in interest payment to the detriment of Blackberry. There is a point i think, the long term ownership comes into conflict with short term ownership. And I think we saw that when the convertibles were re-priced/re-structured in 2020. Long point made short, and quoting Buffet (perhaps butchering a great quote}: "[bB] should be so well capitalized that it shouldn't even rely on generosity of friends [FFH], let alone strangers [sharks] in times of need" PS: I think the current support on BB shares are encouraging in the market, assuming it is not a short covering. +1! Whether they raise capital at BB or Fairfax monetizes the asset in some way...certainly a better position for Fairfax than 3-4 months ago, let alone back in March of 2020. Cheers!

Even if Fairfax doesn't do something directly, BB can do a raise of $1B or something and secure their balance sheet. That would also help Fairfax indirectly. Cheers!

If the bio-terrorist attack would have the same ultra low death rate? I sure hope they'd be debated. It is a war alright. An (mis-) information war on the populace and "the good guys" are not winning. Hardly surprising but still very disappointing. We can debate the merits of being too cautious or opening up the world to normal business and letting the chips fall where they may. That's easy to say if your health isn't compromised or you're over age 75. We can also compare other parts of the world that simply let the virus spread and create herd immunity early, but you can easily show how isolated regions like New Zealand, the Caribbean, PEI, etc were able minimize infection thanks to their isolated locations. The irony is that those complaining about closed businesses now, weren't complaining about closed borders a year ago...so which is it? There is no true right or wrong answer. It's easy for us all to be Monday morning quarterbacks, and I don't blame either administration for tackling a problem that they've never faced, were unprepared for and hit the entire globe. And who exactly are the "good guys"? My family has lost three people to Covid-19 that normally would not have died if it was simply influenza. I have four friends who have lost family members. It's ultra low only for the majority of people, but extremely deadly for a minority. Cheers!

Who else in the Fairfax sphere owns BB shares? Some management, directors...Francis has some BB in the Chou Funds...maybe Vito Maida at Patient Capital...University of Waterloo's endowment...Huron University's endowment...OMERS? The volumes seem to allow Fairfax's position to be covered...we'll have to wait till the conference call next week to see if they were able to take advantage of this juicy gift! Cheers!

That's not difficult to understand. If you had 1M people carrying the virus 5 months ago, and you have 3M people carrying the virus now, you are going to have a proportionately higher number of deaths. It has nothing to do with masks, vaccines, business or anything else. If they didn't take steps previously, you would have 5M or more infected now and even a higher number of deaths. So let's stop hashing discussions around health officials taking "precautions" during a pandemic. It's a war...these measures would not even be debated if we had this many deaths by a bio-terrorism attack from another country or group. Everybody would be on the same side! Cheers!

They disclosed the Ensign TRS purchase 5 days after the initial transaction, likely because they were a 10% holder of Ensign and obliged to do so. I see no reason why the same disclosure rules wouldn't apply to direct or indirect actions with respect to BB. I think we'll either see a disclosure in the next day or two, or we'll be hearing on Feb 11 about the long-term economic value of those BB shares. Along with Wade puking in the background. I really respect Prem and know he's orders of magnitude more financially astute than me, so my fingers are crossed for a surprise extra-dimensional chess move. But if there's no pending disclosure then Occam's razor points to a dementional lack of action. Wade is one of the core six now with Paul Rivett gone, Sam Mitchell and Francis leaving years ago. The long-term health of the portfolio is in Wade and Lawrence's hands now. If Wade had any opinion on selling Blackberry or buying puts, etc, to capitalize on it...it would be given significant weight in the room. Also Wade is no light weight...he and Tim were Peter Cundill's main guys, and he essentially led the team when Mackenzie bought out Cundill...now he works with Prem and Brian, and they are expecting him to lead. Cheers!

From the volumes of various BB puts that traded in the last two weeks, I could see them covering 40-50M of the shares. 100M might be tough. I still think they found some way to lock in a significant amount of the gains. Someone would have underwritten the risk that the price could continue to get squeezed while FFH locked it in at say $18-20. The underwriter would benefit from the increase above $18-20 and probably offset their short position. Fairfax has enough connections whether here or abroad to find someone to take that bet. Again, I would be hugely disappointed if they didn't capitalize on this somehow...they must have made or locked in something! Cheers!

Robert Kiyosaki seems to be pushing it pretty hard on Twitter! I liked Kiyosaki's first two books...Rich Dad, Poor Dad and Cash Flow Quadrant. They were a couple of the earliest investment books I read after Peter Lynch's Beating the Street...which was a terrible book to learn how to invest in the stock market. But over the years, Kiyosaki's gone stir crazy...he's pretty nuts now! Although I would still recommend his first two books to new, young investors. Cheers! A little of topic but how do you mean terrible book? 'One up on wall street' is one of my favorite books and was planning to read 'Beating the Street' one day. There was no intellectual framework in how to select stocks. It was full of discussions about how Lynch selected individual stocks, groups of stocks...alot of it based on "buy what you know". When I tried to invest using his methods, it was pure luck...half the time I made some money, half the time I lost money. It worked for him, but none of it could be duplicated! I finally woke up when I read Buffett's Letters, "The Intelligent Investor", and finally "Securities Analysis". That's when my batting average finally started to improve and the fundamental way I selected stocks was consistent, methodical and would work for the rest of my life. I got far much more value out of just reading 10-Q's and 10-K's in my first six months, than I did from Lynch's book. Kiyosaki's books were good in just changing my mindset in how to invest, why buy businesses, and to create passive income. But Ben Graham's books and Buffett's Letters changed my life forever! I will be eternally grateful to them! Cheers! I agree very much on the Buffett and Graham aspect and learned a whole lot more from them than from Peter Lynch, but I read 'One up on Wall Street' after I already got the "value" part of investing. I think it is a very insightful book after understanding the value aspects of businesses. I also think Peter assumed the reader already knew how to value a business in some way and that the book should be a follow-up. He himself uses the value part also, only growth and 'buy what you know' was maybe his number one. Still one of my favorite books. The other issue is who the hell can invest like Lynch did. At the peak of the Magellan Fund, he had like 3,000 investment positions...that's probably double the size of my circle of competence, let alone the universe of stocks I could invest in. He also would never recommend holding a portfolio with less than 50-100 stocks. I'm lucky if my portfolio has 10 stocks...and in actuality, if I've got 10 stocks, then I'm not that sure on a couple of them. I've been most certain about my portfolio when I hold only 4-7 positions. I just didn't gain any real knowledge or ability from his book. It was a good read, but that's all I got out of it. Not to take away from the brilliance of the man and investor...but it just didn't do anything for me. Cheers!

I think they bought put options. That way they don't sell the position, aren't tripping any clauses in their standstill agreement, and would benefit from any correction in the BB stock price. No way they didn't capitalize on it somehow. Even I would be greatly disappointed if nothing was gained! Cheers!

Robert Kiyosaki seems to be pushing it pretty hard on Twitter! I liked Kiyosaki's first two books...Rich Dad, Poor Dad and Cash Flow Quadrant. They were a couple of the earliest investment books I read after Peter Lynch's Beating the Street...which was a terrible book to learn how to invest in the stock market. But over the years, Kiyosaki's gone stir crazy...he's pretty nuts now! Although I would still recommend his first two books to new, young investors. Cheers! A little of topic but how do you mean terrible book? 'One up on wall street' is one of my favorite books and was planning to read 'Beating the Street' one day. There was no intellectual framework in how to select stocks. It was full of discussions about how Lynch selected individual stocks, groups of stocks...alot of it based on "buy what you know". When I tried to invest using his methods, it was pure luck...half the time I made some money, half the time I lost money. It worked for him, but none of it could be duplicated! I finally woke up when I read Buffett's Letters, "The Intelligent Investor", and finally "Securities Analysis". That's when my batting average finally started to improve and the fundamental way I selected stocks was consistent, methodical and would work for the rest of my life. I got far much more value out of just reading 10-Q's and 10-K's in my first six months, than I did from Lynch's book. Kiyosaki's books were good in just changing my mindset in how to invest, why buy businesses, and to create passive income. But Ben Graham's books and Buffett's Letters changed my life forever! I will be eternally grateful to them! Cheers!

Robert Kiyosaki seems to be pushing it pretty hard on Twitter! I liked Kiyosaki's first two books...Rich Dad, Poor Dad and Cash Flow Quadrant. They were a couple of the earliest investment books I read after Peter Lynch's Beating the Street...which was a terrible book to learn how to invest in the stock market. But over the years, Kiyosaki's gone stir crazy...he's pretty nuts now! Although I would still recommend his first two books to new, young investors. Cheers!

People that missed out on GME that want the 'next' thing Couldn't agree more! Is this board full of distressed value investors or now full of Reddit lemmings? If you are buying GME, Silver or anything else that may or may not be legitimately pushed by the Reddit longs...caveat emptor! As much as I am pleased that anyone or anything related to Steve Cohen was hurt by the Reddit longs, I'm equally concerned that common sense will go out the window and fundamental investors are suddenly becoming traders! Cheers!

When we say that he doesn't miss an opportunity, we're talking about positions they already have...not missed opportunities. He generally finds a way of monetizing an asset they own, even though hopes for that asset might not be so great in the eyes of the general public. Cheers!

+1! Totally agree! They always find a way to capitalize on these types of situations. Usually in a way most shareholders don't expect. It would be very surprising if they did not. Cheers!

Bear Stearns...Lehman Bros. It's not that two parties are making a trade. If the parties are large enough or have enough fire power, they could take down a major financial institution...and then dominoes fall. Now when I say two parties, I'm not referring solely to the WSB crowd, but even rogue hedge funds, private equity funds or any other fund of size. If parties are acting together, they should be filing their positions together...such as proxies, 13D's, etc. Personally, I'm pleased that hedge funds got a taste of their own medicine, especially anything involving Cohen, but the system has to have disclosure, transparency and rules to create a fair playing field. Cheers! I guess what I meant to say was. Say 2 parties: a retail investor at TD Ameritrade and an Hedge fund client at Goldman make a trade. The retail buys $10,000 notional value of calls from the Hedge fund. So now the fund has a $10 k liability which may be naked or hedged against the stock. At this point, why are either of the brokers involved or have any risk? Doesn't the risk belong to the investor on either side? Granted, assuming the brokers require decent margin requirements of their clients. But why does trading need to be restricted at this point? Why can't the brokers just ensure that the margin requirements are aggressive enough? I noticed a bunch of them raised the margin req to 100% for these stocks. At that point, what is the risk to the system? Now the step I never appreciated was that there is a market maker in between all of this. They sell you the option to make the market and then find a party to take the other side. In order to lower their risk, they buy stock. So the way I understood the gamma squeeze was that a whole bunch of retail piled on buying calls that the market makers sold way too much risk that they couldn't sufficiently offset just because 1) there aren't enough shares available and 2) the float is so thin that the stock needed to hedge just shot up 50%. Because the position only gets bigger as it works against you, the Market Maker's liability kept growing which contributed further to the squeeze. Is this a good description of the risk to the MM? But again,, even in that case, why can't the MM just stop selling calls? Or why can't they just limit the amount of risk they take? It's not the cash accounts that cause the problem for the brokerages. It's the margin accounts and it affects them two ways: 1) They are lending out securities by borrowing from a customer's account to someone who needs to cover a short position. 2) There is interest paid to borrow those securities and on the margin account. The interest isn't as big of a problem on the security, because you know what it is, and generally the brokerage is collecting the interest from the borrower. But the problem arises when 1 happens on a large scale...a six-sigma event. Say RH borrows 1M shares of GME from someone's margin account and lends it to someone who needs to cover their short. So as the stock is rising, the borrower gets these shares at an inflated price...say $250. RH is now on the hook for that borrow for $250M...it wasn't a cash purchase, but a borrow in a margin account. RH collects say 20% interest and pays 15% to the lender, but RH is on the hook for $250M while collecting 5% of the interest. Now the next day the stock falls back to $150. The borrower is on the hook now for $250M and can't cover his whole margin account, which essentially puts RH on the hook for the difference. RH only has to pay $150M as the price has fallen to acquire the shares, but the difference is $100M minus whatever they can collect from the borrower's margin account. Now multiply this scenario by 100 fold, and suddenly RH has a shortfall of $1B+. If the brokers were not lending capital for margin accounts and lending securities...they don't have a problem. But nearly all brokerages are in the lending business. Generally they take enough precautions on interest, margin restrictions and margin calls, but you have a six-sigma event where there is massive exposure in a short period of time...you get problems! And my example doesn't even include asset to equity leverage. Virtually all brokerages operate at a 10-1 leverage and many operate much higher. I would imagine RH operates somewhere closer to 20-1. Cheers!

I fully agree. I wouldn't use them period. But for those that are, as long as they are within SIPC limits, they should be ok. Cheers!

Securities are held in "street name". If your broker goes under, there is no guarantee that you will get them back. As mentioned by others above, full recovery is likely due to SIPC but the process can be prolonged. In practice, the accounts are usually assumed by another broker with minimal hassle to the account owners. They are held in "street name", but your account is really only exposed if it isn't a cash account and you have cash and securities above the SIPC limits. So if your assets are above $250K in cash and total of $500K in cash/stocks/bonds sitting in a margin account...your exposed. Margin account assets can be comingled with the brokerage's own assets if they are lending securities...which all do. Cheers!

IBKR chairman on CNBC today: https://www.cnbc.com/2021/01/28/interactive-brokers-restricted-gamestop-trading-to-protect-the-market-says-chairman-peterffy.html He is very worried about a broker or clearinghouse failure. He doesn't mention which counter-party he is worried about, but RH says they are restricting long stock purchases due to CAPITAL requirements. This suggests RH is thinly capitalized. I know RH investors aren't sophisticated enough to understand this, but if I was sitting on $20M paper gains at RH, I'd be very worried about the viability of my broker. Disclosure: long IBKR Edit to add: When you say that IBKR should permit bear call spreads, you are saying that IBKR should accept the counter-party risk on both legs of that trade. The trade might be low-risk for you, but very high risk for IBKR. That is a possibility if your account value is that high. Otherwise for most accounts, they have normal SIPC coverage and Robinhood has a $100M policy with Lloyd's. Although with all of the trading going on, $100M might only be a fraction of the trading volume running through Robinhood right now. From their site: Robinhood Financial and Robinhood Securities are members of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. In addition to SIPC protection, Robinhood provides its brokerage customers with additional "excess of SIPC" coverage through certain underwriters at Lloyd’s of London, which provides an aggregate of $100 million of coverage—up to $1.5 million for cash and $10 million for securities per customer. The excess coverage would only be triggered when SIPC coverage is exhausted. Cheers!

That is relatively true today. Not so about 15 years ago. Back then the DTC was not able to guarantee T+3 delivery of shares and you had what was called "naked shorting". Essentially, you would have large hedge funds take huge short positions against low float stocks, and slowly drive the price down as the time to delivery grew longer and longer. At its peak for example, you could short Overstock.com and the time to delivery of the actual stock was 4 months plus. So you were creating artificial shares in the short term that were being shorted and the market price would be driven down in a short period of time. If the company was even slightly vulnerable, the stock price would become so low that it would be ridiculous to raise capital through an equity issuance and institutions would not even consider a debt issuance. This was done to Bear Stearns during the financial crisis by a group of hedge funds. This was also done to Fairfax and if it weren't for $300M being raised through Cundill Funds, South Eastern Management and Markel, Fairfax could have been driven out of business back in 2003. It took about 7 years for the SEC to fix this issue, and today you have efficient markets delivering on time or institutions face consequences. So shorting is no longer detrimental, but assists in making the market efficient. Cheers!

Bear Stearns...Lehman Bros. It's not that two parties are making a trade. If the parties are large enough or have enough fire power, they could take down a major financial institution...and then dominoes fall. Now when I say two parties, I'm not referring solely to the WSB crowd, but even rogue hedge funds, private equity funds or any other fund of size. If parties are acting together, they should be filing their positions together...such as proxies, 13D's, etc. Personally, I'm pleased that hedge funds got a taste of their own medicine, especially anything involving Cohen, but the system has to have disclosure, transparency and rules to create a fair playing field. Cheers!

Hi wachtwoord...Greg's post that got him in trouble was not in the Politics section, but this Coronavirus thread. If it had happened in the Politics section, which was closed a few days ago, he would not have gotten in trouble. It's as simple as that. So me being impartial is not an issue. If someone else did the same thing, they would be gone too. Greg has gotten a couple of warnings about posting political or inflammatory comments outside of the Politics section...this was not simply a first offense, but it consumes my time moderating the board. If people cannot follow the rules, there are warnings and then a consequence. Cheers!

Where are you coming up with 5 days? I have never seen a 13D amendment issued later than one day after a change of 100 basis points or more change in position size. The SEC rule is that you must file promptly. Blackberry is U.S. listed and files a 10-K so can't imagine Canadian rules apply. Per SEDI Wade Burton sold some shares today and Roger Lace sold some last week. It is going to be a very hard conversation if two senior members of Hamblin Watsa sold shares but Prem wouldn't let FFH sell any. Holding out hope FFH used a total return swap to reduce their notional exposure and somehow convinced themselves via their attorney that they don't need to file an amendment as the TRS is cash settled and not a security. But I'm thinking that is a long shot at this point. I'm pretty sure they did something. They are value investors...opportunistic investing...this is not something they would not protect. I doubt they sold shares, as that wouldn't look good in terms of their long-term expectations for BB. Put options, total return swap, written calls, BB doing a private placement at a high price...they have choices other than outright selling. And if Wade sold, you know the team is thinking about the best way to protect the gain and BB as well. And this is Fairfax, they can execute on these things very quickly...it doesn't take weeks. Cheers!

From everyone I spoke to it was much more about low quality and rudeness. Again it was the same two names over and over again. It's like an extreme version of the Pareto principle. Instead of the 80/20 rule, it seemed like the 2998/2 rule. I suppose if you remove the 2, then you might have new problems pop up, but I appreciate and support your management of the situation, Parsad. Thank you for preserving an alternative to Wall Street Bets. I also don't want to blame any individual or group of individuals. I read the posts, and alot of crap was flowing from both sides in the Politics section over the last couple of years. I've had an exchange of emails with Greg and he's in timeout. Just like others have been before. It's not your typical timeout...this one requires you to change your habits. If he feels he can do so, he will be allowed back when he's ready...and we'll all be better for it! At this point, his opinion is basically you can shove your message board where the sun don't shine...so, yeah he's not ready! But that's up to him. Cheers!