frog03
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Posts posted by frog03
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bruce is very very good. This being said, he underperformed meaningfully in 1997-1999, so his beating of the S&P 500 is likely about 7 points a year since 1997.
very very good, but somebody like Sprott has done about 14 points vs the TSX. So the difference between Sprott CE and Fairholme is as big as between Fairholme and the US market represented by the S&P 500.
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If you include the cash hoard before the Compellent acquisition, Dell is trading at < 5x operating income.
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Similar point made by Longleaf but appears wrong to me. The cash balance is way above stockholder's equity, i.e. the cash is not belonging fully to stockholders, only partly.
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net of fees McElvaine has beaten his index by 1% a year over 13 years... Don't get too excited by his ideas.
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I agree on the double counting. This being said, he is only willing to pay 50% of this IV.
His win/loss track record at around 90% is extremely good.
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What investors were covered in the last issue please?
Thx
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BRK
Loews
Biglari
Codi
PICO
BAM
MKL
GE
Groupe Bruxelles Lambert/Pargesa/Power Corp of Canada
Investor AB
Jardine Matheson
Oresund
Investment AB Kinnesik
GLRE
CET
LUK
FUR
LRE
Hallmark Financial
Mass Financial Corp.
Some good names in this list, some I am not so sure (GE is all over the place but its capital allocation does not make sense to me. PICO management is grossly overpaid and has relatively poor results LT, Biglari why do we care about him in this forum..., LRE is definitely focused on a single type of business).
I think a better question would be who has made 20% for their shareholders on a dozen years or more. Then the list becomes much much smaller... In addition to some names on the list, Danaher comes to mind.
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Lancashire Holdings is by far our biggest holding and keeps growing as they buy back shares and pay large dividends that are mostly reinvested.
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At current prices, Lancashire Holdings trades about 10% above Q2 book value. What do you consider a good entry price? Book value?
Thx
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Sanjeev,
I don't see why you call Sprott a nut. You advocate long term returns and you beat him on the head for 2008, one year out of 30? Out of 30 years, he has made 20% net for his investors compounded after copious fees for:
1) his managed accounts (read stock market superstars)
2) his Canadian equity fund (19% IRR since 1997 as of last month, close to 13 points ahead of the TSX)
3) his hedge fund is also up 20% annually since 2000
Some of his funds have been launched a few years ago and/or are not managed directly by him.
Watsa has had several years of terrible performance and very large leverage. He came out of it but quite possibly could not have (look at his debt to equity ratio just a few years back at FFH...).
A lot of your comments I agree with but your cheap unjustified shots at Sprott don't make any sense.
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What are 3 of the top performers in the stock market in North America over the last 30+ years? Buffett, Watsa, Sprott.
Buffett : His exposure to stocks as a percentage of assets is not super high
Watsa : Fully hedged
Sprott : 3/4 in precious metals and precious metal stocks, some shorting of financials/retailers/etc
Buffett just completed the largest equity purchase in Berkshire history - Burlington Northern Santa Fe! Yes, he took it private, but he still paid market prices.
Prem just finished buying all of his public subsidiaries at market prices. Again, they are private now and their valuation is not open to the whims of Mr. Market, but he still paid market prices and the long-term outcome of his investment is completely predicated on the price he paid.
Sprott - Well, he's just nuts! Incidentally, outside of his hedge fund which was hedged, didn't all of his other funds get absolutely killed when commodity markets corrected back in 2008? I think they were all down a minimum of 35%, and all the way up to 65% in 2008. Cheers!
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What are 3 of the top performers in the stock market in North America over the last 30+ years? Buffett, Watsa, Sprott.
Buffett : His exposure to stocks as a percentage of assets is not super high
Watsa : Fully hedged
Sprott : 3/4 in precious metals and precious metal stocks, some shorting of financials/retailers/etc
In finance the majority is usually wrong, but these guys collectively are quite bearish at current market levels. I tend to be the same. Valuations, especially for some mega caps are reasonnable, but the deleveraging from now is going to be ugly.
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What is the ticker symbol in the US?
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Any ideas about fairfax book value per share as of 6/30?
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thanks. Who is greg alexander?
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Thanks for the info re the loss reserves.
Yes, my ratio is to indicate the amount of leverage.
This being said, the track record at C (complete erosion of book value per share over the last 5 plus years) is definitely lacking. So a 5% or a 12% given the track record (sure some folks have changed at the top) would not leave this investor very comfortable.
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C is exactly like many financials Sprott stays clear off. Take equity in the latest quarter, remove goodwill/intangibles, you arrive to 5% tangible equity to assets ratio.
This is living dangerously...
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What is interesting to me is that two superstars such as Berkowitz in the US and Sprott in Canada can have such different views on financials in the US. It is hard for both of them to be right unless Berkowitz subset of financials seriously outperform the US financials in general.
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Any way to see LL's holdings? No luck with mffais. Maybe too small in US-only holdings?
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Looking forward to hear your rationale as well as learning more about this person.
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In Canada alone, there are plenty of guys that do so I don't know why anybody doing a bit of homework would want to invest with him. But maybe this is just me...
Care to share? I'm looking for something similar to Fairholme in Canada. I'm shocked at the fees though, compared to the US funds.
>>> Sprott Canadian Equity has beaten the market by a dozen plus points over a dozen plus years for instance. Not quite the same approach as Fairholme but definitely same league results. Check out FrontStreet or Patient Capital (this one needs 500K though) for superior returns.
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If you look at the track record, the results are basically matching the index. Now, that may have been accomplished with lots of cash, his style maybe out of favor, he maybe the nicest guy on earth, a good friend of Prasad, extremely etchical, he may be great in the future...
But basically, he is not adding much if at all vs holding an index.
In Canada alone, there are plenty of guys that do so I don't know why anybody doing a bit of homework would want to invest with him. But maybe this is just me...
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Based on the Q4 filings, Berko has about 20% of his assets in BRK (BRK+BNI). Now considering BRK price movement since the beginning of the year, I'd venture he would not be very far from 1/4 as of today...
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Very long term, the best stock mutual fund managers do about 5 points a year better than the market (see FPA Capital, First Eagle, Third Avenue...).
Berkowitz (on his managed accounts which started a bit before the mutual fund) and the Kinetics Paradigm fund do about 9 point better than the market.
Now, some hedge funds do even better (see recent post about Einhorn, Sprott, some others) but often do not accept new investors or have hefty requirements.
Seems to me that for a relativeley small investor (25K or more) that does not want to/cannot do the work himself, it is virtually impossible to find a manager that is likely to beat the magic formula especially on a pre-tax basis. Do you agree?
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Interesting idea. What else do you like in this market?
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Actually, if we look at the last almost 24 years, then the book value per common share of Fairfax has increased 26% annually (taking dividends into account). For comparison, Berkshire has increased book per share by 20% annually over the 25 year period from 1984-2008.
As for the lumpyness, Berkshires change in book value from year to year have a Gini coefficient of 0.42 from 1984-2008, where the Gini Coefficient for Fairfax' book increase is 0.50 for the period 1985-2009´Q3.
So yes, the returns for Fairfax is more lumpy - but not that much.
In fact, the lumpyness in Fairfax' return on book might be thought of as additional return when compared with Berkshire.
24 years is pretty long duration - but for obvious reasons it is smaller than Berkshire' full history.
>>> Actually, you probably would want to compare the first 24 years of BRK vs the first 24 years of FFH. Otherwise, FFH has a huge size advantage (being so much smaller makes it easier to get good returns).
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I forgive you the rude comments, ...
You can't dispute the performance comparison so you are rude? Fair value is Fair IV. In the past Watsa has issued stock way above fair value.
FAIRHOLME FUNDS, INC. PORTFOLIO MANAGER’S REPORT 2010
in General Discussion
Posted
Frog, is there any particular reason you only included 1997-99 for BB? I think those are his worst years, so obviously only including those has a meaningful impact on his overall performance. Anyway, I guess what I'm saying is if you're going to include the worst years from his Fairholme Capital days, don't you think you should include ALL years and go back to the early 90's? when he formed it? I think you may get a very different picture of his performance...
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I had seen the performance of his managed accounts in 1997-1999, and they were managed very similarly to his mutual fund (which obviously started a bit later). Fairholme capital was formed in 1997. So I think the comparison from 1997 on is valid, especially with Sprott CE starting in 1997. If somebody had the exact performance of managed accounts 1997-1999, I would appreciate.