Parsad

Are you kidding me! Bill Gates has his hands in as many industries as Buffett through Cascade Investments. Gates might have made his fortune in technology, but I suspect he'd be an extraordinary money manager. I would certainly put him ahead of Li Lu! And Munger is a huge fan of Li Lu's. Cheers!

#4 baffles me. Why woyld you say that? Gates made a great, and sometimes ruthless, leader of a software company, but how is that anything like Buffett and Munger, or a combination of the two? Buffett was far from a benign leader. He could be ruthless when he needed to be...Sokol's firing, Salmon Brothers incident, the original takeover of Berkshire because he got screwed over on 1/8th of a dollar. I can't imagine a better Chairman than Gates. Howard is a very nice fellow, but really I think shareholder's would be best served with Gates as non-executive Chairman. Who else in the world would better understand how to maintain a moat through thick and thin? He became the richest person in the world when he was a little older than Zuckerberg, and remained so for most of the last 30 years once Sam Walton's wealth was split up and until all of the other tech wonderkinds took over the world. In this type of environment he has not only endured, but survived and maintained his wealth, all the while creating the greatest philanthropic foundation in history, funded by his best friend who was often the 2nd richest man in the world over the same 30 years! And he's still young enough to Chair Berkshire for another 30 years! Cheers!

Depends on what you value most! Best value: I bought a Spiderman comic book in 1978 for $1.25, when I was 9, which I still own today and it's worth about $1,700-1,800...20% compounded over 40 years. I read it only once when I bought it, otherwise it remains in mint condition. Best emotional value: Five dollars I spent in January of 1991 at Army Navy Department Store in downtown Vancouver, when I bought my father a pair of galoshes for his shoes, and then we went and had fries and gravy with some coffee in the basement of Woodward's Department store...it was the last thing I bought for him before he died in April of that year. Best changed my life: Invested $25/month in AIC's Value Fund back in 1994...whose annual report I read in 1998, and which held Berkshire...which led to me reading Buffett's 1998 letter on their website...which led to me joining the Motley Fool's message board in 1998 for free...which led to me buy Berkshire shares in 1999...which led to the MSN Message Board...which led me to Fairfax...which led me to start Corner Market Capital...which led to starting CofBF...which led to taking over PDH...the remainder of the story is unfinished! Cheers!

Sanjeev, I'm trying to understand your thought process here. It seems you are saying that it would be ok for you as someone who runs an investment fund to have 25% or 40% of your net worth held in an investment vehicle outside of the fund you run for investors? ...am I missing something important here? Of course! People have homes, family businesses, other assets that aren't in a fund. Do you expect all fund managers to have 90% of their assets in their fund? I expect a fund manager to have a healthy portion of their net worth in any fund they run, but I don't expect them to have all of their assets or even the 90% threshold that are met by managers like Buffett and Watsa. That's just not really fair or rational. When I started out, I didn't have much in my funds, but today I have alot in my funds. My behavior hasn't changed at all in how I run the funds. You are either dealing with ethical people or you are not. I'm sure Bernie Madoff had a lot in his funds, and he still screwed over everyone! Francis is one of the most ethical people you will ever meet. Whether he has 90% of his assets in Chou Funds, or 50%, or even nothing, he will not behave any differently. Cheers!

Let's just say it's more than Stonetrust. Cheers!

I can answer these for you based on my understanding behind the purchase. 1)What do people think is the motivation behind Francis Chou purchasing Stonetrust Insurance company from personal $s ? For many years, he has been looking for a personal vehicle...Stonetrust provided that opportunity. a)Is purpose to deploy personal wealth and make more $s for self, family, or charity? Yes to all. Remember, Francis was the one who understood Buffett's use of float and told Prem about it many, many years ago before Fairfax. He thinks that he can grow capital utilizing float and Stonetrust is his chosen vehicle to finally do that. b)Is there a view towards incorporating Stonetrust into Chou Funds or vice versa? perhaps as a way to improve results for the Chou Funds? No. There is risk in his management of Stonetrust and he's not interested in exposing investors to that risk of losing their capital. It will not be offered to the general public. The Chou Funds will fluctuate in value, but over time, he will always make money for them. The likelihood of Chou Fund investors losing capital over the long-term is low. He cannot provide the same protection in Stonetrust. 2) Is it reasonable for an investment manager to deploy such a significant amount of $s (?$70M +) in a purchase other than his own fund? Does the alignment of interests hold? Most of his wealth is still tied up in the Chou Funds, so it isn't like his interests aren't aligned with Chou Fund investors. It would be no different than if he owned a $70M apartment or commercial property outside of the Chou Funds. Am asking these questions as a longtime Chou investor (>10 yrs), with significant portion of portfolio in Chou Funds who is considering the pros and cons of staying in the Fund. His investment in Stonetrust should have zero influence on your decision to stay a Chou Funds investor. Cheers!

Yes, we use a service called "SkipTheDishes" about 2 times a week. We eat out about 2 times a week. I buy breakfast or lunch generally 2-4 times a week. I also use Save-On-Foods grocery delivery business 2 times a month. If we have guests over we may cook or barbecue, but sometimes we also use a food delivery service...be it SkipTheDishes or a restaurant's own delivery. I do not watch wrestling, but I do watch a lot of sports...I do not subscribe to any specific sports network. My last discretionary purchase were healthy wraps from Chopped Leaf today for dinner for my family...I picked them up when I dropped off my dry-cleaning. Cheers!

Thanks for this info Sanjeev. It is going to be a used one because it's against my religion to buy new cars. But it won't be anything crazy old. Something like 3 years used. Yeah, me too! 3 years old or so...go for it...she will love it! Cheers!

It's for a luxury ride. I was thinking Mercedes but Jags are NICE! So I'm thinking it would be really cool if she could have one of those :). But I also don't want to get her the car from hell. That would defeat the whole purpose. She drives a Lexus now. So of course either way it'll be a downgrade in reliability. But I don't want to go down too far. Jags built in the last 5-6 years are fairly reliable and comparable to most manufacturers. Certainly not top of JD Powers, but not the money-sucking Jags built in the 70's, 80's and 90's. Jags built between 2000-2010 have far more issues than Jags built after Tata took over. Not sure if you are talking about a new Jag or older Jag. If you are talking about the newer Jags, sure buy your Mom a really nice car. If you are talking an older car, Jags pre-2010, and she's used to driving a Lexus, don't do it. Get her an older E series Mercedes Benz, Cadillac or an older 5 Series BMW...maybe even another Lexus. Like any car, especially used, if the owner(s) took care of it, it will be a good car. If the owners didn't, then you may get stuck with a car that needs alot of updating and repairs. Cheers!

Some of you might not have heard, but the 2nd Q conference call was the last one with Prem. Paul Rivett, President of Fairfax, will be leading the calls going forward. Paul will do a fantastic job, and fear not, Prem will still be speaking at the AGM and various other engagements. Going on 33 years at the helm...what a great Canadian business leader! Here is the transcript: https://seekingalpha.com/article/4194636-fairfax-financial-holdings-ltd-frfhf-ceo-prem-watsa-q2-2018-results-earnings-call-transcript For those that want to listen to the real deal...you've got till 5pm Friday, August 17th: https://www.fairfax.ca/news/press-releases/press-release-details/2018/Fairfax-Announces-Conference-Call-d7158b57a/default.aspx Cheers and enjoy!

What given2invest said about Tilson is all valid so I won't dive into that again. Also, please don't lump Cohen - the insider trading king - in the same category as Buffett. Regarding Ackman, at first sight he seems like the real deal. But if you follow him for a while you realize that he's just a fantastic salesman and a great bullshit artist. That's why he has the 100+ slide decks. He looks great on CNBC and all that adds up to a lot of AUM. The fact that he probably lucked into some good trades also helps with the cult of personality. On the flip side despite all that's happened I think Einhorn is a great investor but he is being harmed by the hedge fund model. Basically the whole long short thing. The aura around hedge funds being that they have to be long and short at the same time and make money on both. That's what sold and you have to go with it if you wanna make money. It doesn't help Einhorn given that he got notoriety for his shorts. I think he's a great long stock picker, but he's forced to be short by the model. Let me elaborate a bit and get a little academic. If you assume the markets are efficient and you're a long/short fund with equal exposure then you'll make risk free. Now I don't think that the markets are efficient and these guys are not perfectly long/short. But still, given the market inefficiency and you being good, you'll generate some alpha. Maybe you do it on both sides. But alpha is hard, and in a raging bull market there's no way you generate enough alpha to beat the market. So the system is setup to make you fail as a hedgie. But hey, that's what sold AUM! The rest of your post about rich kids and real jobs doesn't make much sense. Buffett was basically a rich kid and he turned into a great investor. Working on the street is not a real job and you don't learn anything about investing by working on the street either (you do learn a lot about Excel though). Plumber, mechanic, doctor, those are real jobs. But I don't see the legions of great plumber-investors. Investing is just like any other craft. You get good through much study and practice. I'd also say that in this discipline, like many others, being a rich kid helps. But I think in investing it helps more. Also, there's a very big difference between being a good investor and being a good fund manager. Einhorn is a brilliant guy, even though I'm not a fan of his antics. Ackman is smart, charming but reckless. Tilson was great at running with their ideas, and if their ideas weren't plentiful...his buy Berkshire below intrinsic value analysis would usually come out...his philanthropic work was more notable. Cheers!

Time for an activist. LOL Ackman! :P Cheers!

I dont think anyone is demonizing the russian people. It's the institutions and government that people are complaining about that allow those friends of ths government to become billionaires through no talent of their own. But that happens everywhere...no one complains about the same thing in China, India, U.S., U.K., Germany, etc. Alot of people around the world are billionaires with no talent of their own...some even become President of the most powerful nation on the planet! ;D Cheers!

Not the most boring, but the least enjoyable. Why? Because you feel bad about yourself that you are jealous and it doesn't make you feel any better like gluttony or adultery...at least there is some pleasurable aspect in virtually every other sin. But jealously...you lose both ways! Cheers!

He was shorting to maintain a neutral position on attained stock that was issued to him (probably stock reinvestment dividends)...he incurred zero profits or losses. I would prefer if Ross put everything into a blind trust, but this is probably the best we could hope for when the President not only doesn't put his business operations in a blind trust, but continues to manage them while in office. Truly a conflict of interest, but the ass doesn't care what he does or how it looks. Cheers!

Hi Liberty, You are actually probably correct. I think part of the reason is that as people do well in their own lives, they lose a bit of humility and their egos tend to become somewhat enlarged. I have to say, that I'm actually more impressed by my mentors as I'm aging. The reason being isn't so much in what they have accomplished, but how they did it and how they continue to fight or persevere no matter how much the winds might blow against them. Warren Buffett - He continues to do things at his age that simply cannot be duplicated by the vast population of his followers...first you have to live as long as him...second you have to be as damn consistent...and lastly, you have to be as good! Charlie Munger - What is there to say...like Popeye, "I ams what I ams!" Title of "the most interesting man in the world" actually belongs to Munger, not the "Dos Equis" guy! Prem Watsa - Here goes the only man I know whose ego truly disappears every time he makes a deal. Accolades go to everyone except himself! And any philanthropic work he does...just please don't talk about it or mention his name. One of the best leaders I have ever seen. Mohnish Pabrai - Every time someone tells him how badly he sucks, he goes and hits a homerun. Ego is very un-Prem-like, but talent and smarts is all there. One of the few people who will actually say when he sucks wind...but pursues every day trying to make himself better and better. Francis Chou - About the only person I know, that could out humble Prem! Continues to do what he does every day...builds wealth for others and himself...and never forgets who he is and how he got there. I can't say I'm less amazed by these guys today. I know alot more, and have hit a few homeruns myself, but their consistency, longevity and humility, as well as their insights...continue to astound me! Cheers!

Agree. They should not have encountered this issue in the first place. But the fact that they could make the repair over the air through a software upgrade...pretty amazing! Cheers!

On any other day, this would not be a noteworthy article...Consumer Reports recommends the Tesla 3. A week ago, CR found that the brakes on the Tesla 3 were underperforming so badly, that they could not recommend the car. Then Elon Musk had his Tesla team update the software remotely for the antilock braking system, and the brakes performed so much better that CR now recommends the Tesla 3. They not only upgraded the brakes remotely, but a number of other things including touch controls, etc. Nothing new for Tesla owners, but light years ahead of everyone else! Cheers! https://finance.yahoo.com/news/tesla-model-3-gets-cr-recommendation-braking-160939098.html

+1! A decent New York strip cooked properly is as good as the best Wagyu or Kobe beef I've had. The funny thing is, the best chefs in the world do not eat the dishes they dream up daily. They actually prefer to eat more simple food, and they cook more simple food at home. Cheers!

Depends on what you perceive as "best"? Best at creating artistic dishes that entice the palate...then perhaps. I've been to plenty of high-end restaurants, and plenty of "hole-in-the-wall" restaurants...and I have to say that many of the quality "hole-in-the-wall" restaurants have more robust flavours that the "high-end" restaurants can only aspire to create. Then there are those people who simply want what they like and want it cooked the same each time. If you've ever been to Gorat's, you aren't going to walk away thinking "wow, that was the best restaurant I've ever been too, where the food was terrific and the service wonderful!" But that's how Warren Buffett feels every time he walks out. And then if you are like me, and walk out of a high-end restaurant still hungry after spending $300-$400 on dinner for two people...well you know that "best" doesn't necessarily mean "best!" Five Guys anyone? Cheers!

Actually, I think most professional money managers on here will agree, and I'm happy to put in writing if you need me to Eric...75% of the time is spent on client-related, administrative duties, accounting, legal, audit, letters, etc. The 25% of time spent on the portfolio is time that is highly flexible...you can do it anytime, including when the wife and kids are asleep, at school or occupied. For me, 90% of it is done when everyone is asleep. And in your case, you were not a professional. You were a private investor, occupying time socializing when on the message board, and then making large, very extreme bets on a handful of occasions. It's as far-removed from a professional investor as you could get. Cheers!

Yup, stupid proposal. That being said, it's being proposed for by a "cross-border council", and not by any specific party. Cheers!

If any investment manager is touting his or her fabulous returns without mentioning the margin risk he or she took as a fiduciary of his or her clients or is not comparing him/herself to what the index would've done with the same level of margin, I think people should definitely raise an eyebrow. Showing great returns with margin is really easy. But it doesn't make it smart. I'm not opposed to leverage. For example, generally speaking most of what a PE investor is paying for is not for the investment genius of the manager but for the cost of capital arbitrage a PE Firm is able to procure, vs. its investors themselves. Hedge funds have an even lower cost of arbitrage, but its far far riskier because of how quickly it can get called back at the worst time. You said that this wasn't directed at any manager in particular...noted. I thought I would just clear up the leverage Arlington used on that Berkshire bet...remember, BRKA stock was trading at about $92K when that bet was made and intrinsic value by Allan was calculated at about $190K per A share. He took a 50% leverage position and clearly explained it to all partners in his annual report. He also indicated it was the first time the fund had used leverage, but the upside was very high and the downside reflected fully in the price. Now going back to your comments on leverage...IB allows 5-1 leverage? If so, that's nuts and I think most investors would still have a losing record doing that, because if they are wrong for any prolonged period, the losses would start to hammer them psychologically. In fact, I think the average investor using leverage would do worse than the average investor not using leverage...and that's because the average investor is average both analytically and psychologically. Cheers!

I've been thinking about this some, as I know some people invested with Arlington, and they've been spooked by this. I certainly don't think Arlington is a fraud, but how might one convince yourself that it's definitely not? That is, is there anything that would provide definitive proof? -M Was that not the year Berkshire made a huge run...and at one point Berkshire made up 50% of the fund, plus they used margin to lever up on that bet? Any investor can get a copy of the audited financials when they invest capital. Other than the Berkshire bet, Allan has not really used margin or significant leverage. Lending stock to shorts or using options is a pretty common practice...so I'm not sure why investors would be concerned about that. They've been fairly transparent about how they invest, and you can view his 13-F's online to get a pretty good idea when he is adding or selling and roughly what prices he is buying/selling at. I met Allan in Omaha back in like 2006 or something. We were the only two guys sitting at the bar in the Omaha Marriott, across the street from Borsheim's, and watching the hockey playoffs. His personality strikes me more as Francis Chou than anyone else. He's quiet, likes a low profile and doesn't care about the limelight at all. He just likes doing his own thing and letting Ben handle the marketing, day to day stuff. He just likes picking stocks, reading and doing his analysis on ideas. He was stuck around $26M then, had a terrific record after 8-9 years...then as word got out and a couple of articles were written, along with great results, assets ballooned. When you get bigger, you draw more attention...and when you outperform your peers, you draw even more attention. Not sure what type of comfort people would need...but it doesn't really matter one iota unless you are investing with him. And if you are, you should be doing your own due diligence such as asking for and reading the audited financials with annual letter, and even calling his auditor and asking questions to get comfort. I don't think they would regret any investor from doing such due diligence...in fact, they probably are looking for more long-term investors with such a mentality. Anyway, I believe their fund is closed at the moment...correct me if I'm wrong. Cheers!

Yes, but they have only commited to buying it at $300m if there is not a better offer. They would get $9m if a better offer is accepted. $9 million dollar bills don't grow on trees, but for Fairfax, this is pocket change, unless they really buy the asset (which I doubt). I think they would buy it...over $1B in revenue for $300M with all creditors settled and a clean balance sheet. This has Bill Gregson running it written all over it. If somebody outbids them, then they walk away with $9M. The toy industry is one ripe for consolidation...retail brick and mortar stores will struggle against Amazon unless they can get scale and continue to move a lot of their business online. Order online and get delivery or pick up at the nearest store...that's the way everyone is going. Cheers!