biaggio

Thanks Txlaw for presentation, pg 6 indicates $280 million to LUK for FY 10, would that be the interest on the $100 million note? Wow. Obviously note is worth way more than the face value of $100 milllion. At 10% discount would it be reasonable to value the note at $2.8 billion? I am trying to sum up all their different parts, as based on BV it seems to be fairly priced, but obviously BV seems to be understating current value of their assets.

wow, the power of compound interest, I normally would take 14% over the next 50 years, but I would have never guessed there would be such a discrepency with the 2 + 20 overhead. Over the long run, it would seem that the managers are making more money without putting up any capital. Does not seem right.

Billionaire Gets Richer Riding Beyond The Efficient Frontier http://www.forbes.com/2010/10/01/high-frequency-trading-intelligent-investing-baron.html "When you were talking about finding the right opportunity, you also seem to put an emphasis on management. How do you evaluate a management team, and how much does a company's team influence whether you invest in it or not? It's everything. You have to find someone who you think will be a good steward of the capital that you've entrusted with him to manage. But if you have someone who's really, really smart and you don't care for them and you don't trust them, that's a really bad combination. So you have to bet on people, and a lot of people we invest in are entrepreneurial. So people are everything, and how do you value them? You do it your whole life. You do it from the time you're in grade school about who you want to be friends with and who you trust and who you think is the smartest kid in class. So everything is about, "Do you want to be friends with this person? Do you trust them? Do you think they're ethical? Do you think they live up to their word? Do you think they live up to their promises?"

I would think that there are very few janitors and busboys reading this board. For those janitors and busboys, we all started as janitors or busboys at some point. If you re reading stufff like on this board you won t be a janitor or busboy for long.

That's the number of shares. From my calculations, that would be about $1,184,939,436. That's more than twice what the company is worth. that might before the reverse split

Is BH a buy now?

While not an Owner Manager Capital Allocator (they have probably been poor capital allocators in past), one of my larger holdings is UNH. I think it is a good buy at <$35. I think it is worth ~$70/share based on ~$3.50-$4 FCF and estimated growth of 7% (approximate growth of health care spending). Why are they cheap? (Negatives) -very negative market sediment. (have not read to many positive articles on this company. A lot of people hate health care sector) -concern over health care reform -management has had questionable capital allocation--buying in shares at higher price + options scandle just a few years ago -fear that U.S. government regulation will kill business (it may very well, but government needs the infrastructure that the HMO's provide. It will enable people to make a choice of what they want to have for health care.) They may not be as profitable in the future as in the past. I think it is a good company because (Positives): -have had consistent FCF over last 10 years http://www.gurufocus.com/financials.php?symbol=UNH -have excellent ROC of 20%. -have started to pay out a dividend. Yield is 1.4% -will not need to much capex (they don t need to spend any more dollars to expand the people they look after) -they have been able to increase the price they charge for coverage -I think they have a endurable competitive advantage: 626,000 physicians and health care professionals. 5,035 hospitals. 60,000 pharmacies which I feel gives them a network effect (patients want to join the network because UNH provides a lot of choice + flexibility, providers want to stay on the network because there are a lot of patients in the network) (from seekingApha article July 2010) Any price war will probably occur down market and UnitedHealth Is a "Luxury" Provider -UNH's outsized presence in up market health insurance products means its corporate customers are more willing and able to pay higher premiums when UNH needs to raise them. -employers are more inclined to retain their white collar employees by keeping trusted doctor networks and customer service. Any price war will effect smaller companies. UNH better positioned to withstand short term losses. UnitedHealth Owns Ingenix -health information is more important competitive advantage in health insurance than ever, rendering Ingenix, the leading health analytics and actuarial consulting firm owned by UNH, a hidden jewel. -Long-term winners under Reform's restrictions will be those companies that determine the most accurate fair-value prices for the health risks they are underwriting. That is, those companies with the best predictive health information. UNH is the only major American health insurer to have its own such first-class health information and analytics firm. To quote Bruce Berkowitz: ” To kill the HMOs, you just have to answer the following question:Who would do what they’re doing if they weren’t doing it?” Th e big issue with HMOs is a radical restructuring of the healthcare system and whether or not someone else can do what they are doing, or whether they can be forced to do it at much lower prices. By studying the industry and the participants, you can come to the conclusion that the only thing the government can do is cut a check. And every time they’ve tried to run a healthcare system by cutting checks, such as with Medicare, the costs just escalate the HMOs have become gatekeepers and they do it for reasonable prices. Th ere is no other organization or other industry that we believe is a competitive threat, and there are no other people that have the scale or skills by which to carry forth the future healthcare system, whether it is universal health or corporate healthcare policies. So when we are trying to kill an HMO, the first question that we address is the obvious issue of how they can be pushed aside, and our answer is that we can’t find any way to kill them from a competitive or regulatory threat. Once you get to that, then you can say that these companies have had really poor capital allocation policies in the past. Th ey have spent billions of dollars buying their stock back at two times or three times current prices. Th e only conclusion that we can come to there is that it wouldn’t be a mistake for them to do that today. Most likely they are all buying their stock back. So if the HMOs— United Health, WellPoint , and others—are not going to manage the healthcare system, then who is? And I can’t find an answer to that. I can’t find an alternative.”

I am thinking + hoping that the indiscriminate buying + selling will provide opportunity for value investor/stock picker such as those on this board.

Thanks for the update. I am hopeful they have something interesting to do with the proceeds. I like what they have done buying various securities at a discount, with good yields, and possibilty of taking over the underlying real estate if they default. It has to be a good time to be loaning money (?), and not a good time to be borrower of money. Maybe that is why they have gone to market. I am disappointed that they are issuing shares- though management buying their share of it is reassuring me a bit. I hope it is not wishful thinking.

T-bone , thanks a lot for your analysis. Very interesting. Will help me out quite a bit.

That now crystallizes Rick_v's average $0.75/share cost with a 40% loss! But hey, that's 100% academic. Cheers! Picking stocks, especially over a short period of time, is very humbling, academic or not

"Also Canadian nat gas tends to get lower prices due to the transportation costs of getting it to the US. Finally they seem like they issue shares periodically which to me will make it difficult to keep the div." yes, thanks. I have wondered why they have issued shares,especially most recently- they claim it is to pay down debt- I am going to reevaluate my thinking. Thanks again

T-bone, Myth, thanks for info above. re CHK -I would be worried about its stewardship (discussed above). As well I am not sure what your thoughts of article on CNBC -posted previously-http://www.cnbc.com/id/39213463 - it seems they are spending their future for short term gain? re catalyst- I am thinking that the expiration of the land leases over the next couple will be the catalyst. By that time the economy will hopefully be in better shape Finally, I own pey.un on TSE. According to company their cost is $2.03/MCF. http://www.peyto.com/news/Q22010PressRelease.pdf - would appreciate opinion on their actual cost-the $2.03 includes operating costs of $0.38/mcfe, transportation costs of $0.13/mcfe, royalties of $0.81/mcfe, G&A and interest costs of $0.50/mcfe Depletion, depreciation and accretion, as well as a provision for future performance based compensation, and future income tax. Am I missing something. Is there a cost not accounted for? I have been very comfortable owning + collecting 10+% yield thinking they are low cost producer + selling at a discount to the value of their reserves ($1.75 per MCF of proven + probable reserves) + management owns ~ 8% of company - am I missing something?

http://www.cnbc.com/id/39213463 Chesapeake Energy's 'Offensive' Hedging Strategy "CEO Aubrey McClendon will pocket more gigantic bonus payments based on quarterly results while he is selling the future of the company down the drain."-comment from reader at end

long interview from this past May,I don t know if it has been posted before. http://www.gurufocus.com/news.php?id=106850 Have only begun to read

http://opinion.financialpost.com/2010/09/13/td-waterhouse-unveils-online-global-trading-for-ten-countries/ for those of us canadians using TD Waterhouse "TD Waterhouse Discount Brokerage introduced Global Trading today, with direct access to stock exchanges in ten countries and choice of seven major currencies. The exchanges include London, Sydney, Brussels, Paris, Frankfurt, Hong Kong, Milan, Amsterdam, Singapore and Madrid. A press release bills it as Canada’s first major bank-backed online global trading service. President John See says the new services gives investors the speed and control needed to maximize returns in global markets and diversity their investments. It means Canadian online investors can trade in any of seven currencies they choose: the British Pound, Euro, Australian Dollar, Singapore Dollar, Hong Kong Dollar, US Dollar and Canadian Dollar. Read more: http://opinion.financialpost.com/2010/09/13/td-waterhouse-unveils-online-global-trading-for-ten-countries/#ixzz0zReEqOmd"

http://blogs.wsj.com/health/2010/09/10/screening-for-aortic-aneurysms-at-kmart/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fhealth%2Ffeed+%28WSJ.com%3A+Health+Blog%29&mod=smallbusiness Screening for Aortic Aneurysms … at Kmart!

would that be RJI,or is there another ETF?

it sounds like FFH bonds are being mis priced in the market. Does anyone hold FFH bonds or prefereds? (I own ORH.A).May it be a good holding instead of cash which is yielding nothing?

uncommonprofits, I have only looked at 2009 annual report. Have you had a chance to look at other years (other than 2008 you mentioned). Wondering what a typical/normal year would be for FCF? I was interested in your idea, as the small town of Leamington, near to me, has produced quite a bit of wealth to several local families with greenhouses + I foresee inflation of food prices in future.

yes

agree with oec 2000 re lack of moat. They had return of $3.7 million(take ~$10 million in FCF + subtract their tax refund) on ~ $90 million of tangible capital which to me would indicate more of a commodity type business.

People interested in ag plays however, might take a look at VFF (Village farms International) - trades on TSX. * Currently trading at about 3x FREE cash flow (pre-tax for the trailing 12 months) - has a moat in being the largest (North American) greenhouse producer and distributor of tomatoes, cucumbers, bell peppers. [i pretty much backed up the truck on this when at 50-60 cents (so <1.5x free cash) -- but at $1.15-$1.25 as of late it still seems very cheap] * Uses about 1/5th the amount of water as field grown produce. * Will eventually be building out their biosphere technology that to date is only being produced on a small scale basis - this new technology is world class churning out the highest yields in the world by a fair margin. Uncommonprofit, very interesting idea--it is hard to find good ideas in agricultural/food area. I had a look at there last annual report. Are you concerned at all with the share structure (insiders own special shares)---I got a bit of a headache reading their ownership flowchart( it may be that I am a little tired + feel a bit slow) they had $10 million but $6.3 million was from tax refund without tax refund they appear to be selling for just over 10 x FCF they have $51 million in debt but $43 million comes due next year also noticed that a couple years ago they bought 5 years worth of nat gas at >$8 per MCF (they should get some relief as this expires in a couple years) Also oec2000, I think the board had a discussion last year about the investment yield of farming...I seem to remember that the consensus was that it was not very good.

I think he wants farmland with its own water supply (the impression I got from the video)

Thanks Rabbitisrich, I am going to pass this along to my kids