Uccmal

Oh, if only. I did a Toastmasters speech years ago and played the interviewer asking real questions I had heard. I would then flip around the table and answer the question the way I really wanted. Where do you see yourself in 5 years? ans. Not working at this company you dumb f--k. true story: In the nasty 90s I had an interview with Weyerhauser for a position in Kamloops BC. The interview was in Toronto. The job was maybe a 50 g per year job. I asked the guys why they were coming to Toronto to interview when BC was in a vicious recession? The said they were interviewing nearly 50 people in Kamloops, Vancouver, and Toronto. After carefully calculating my odds of getting the job I actually said to them: How can you possible make a decision when you have interviewed 50 people? ans. we want to get the best candidate for the job? Q? are you guys for real? Needless to say I improved the odds for the other 49 candidates. I also have carefully avoided investing in Weyerhauser ever since. Another lady thought she was being real smart once said to me: I have these brand new behavioural based questions I am going to ask you. I am pretty sure if you saw my facial expressions it would have looked like this ::) . I could go on. I had 50 some odd interviews in the 90s recession in Canada. One major reason I decided to become independently wealthy.

Follow on to that: flagstone was taken out a couple of years ago... for its book of business by the looks of it. I cant find any info on Blue Ocean re. Good luck to the hedgies in businesses where they have no concept of the risk.

Francis Chou held a couple of these in the mid 2000s, pre and post hurricane seasons. Flagstone re, and Blue Ocean re come to mind. They were private placements. One of them had to be completely recapped after the dual hurricane seasons. This is an inevitable part of the cycle. A couple of good disasters will wipe them out.

I dont believe it for a second. Here's why: Retirees need income, and borrow less. Interest rates should stay low for the foreseeable future, perhaps not this low but low enough. Companies like to have shareholders. In order to keep a good base of shareholders companies will be forced to give back earnings as dividends at a greater rate than presently. Stocks that pay high dividends will do best. In the present climate where interest rates on the 10 year are 2.7% any company that can pay a dividend better than 4% (a 50% risk premium) will have easy access to capital. This is more in keeping with historical norms where the bulk of earnings were paid back to shareholders, than the last 30 years.

I was buying yesterday. I am not an expert on the industry but have followed it for 15 years. Biaggio, I can excuse it with small E&P companies but with companies the size of Pennwest there MUST be a dividend of substantial size. These companies are not the same as an Amazon, or EBay, or Google where the business grows over time, and you can see a growing asset. So they must pay a dividend or I wont invest. If they are not generating distributable cash flow after their capex, and opex, then the value of the business is zero. The land is worthless if you cannot generate distributable cash. Therefore the PPE, and the company are worth zero. Subject to someone else coming along who thinks they can improve the situation, of course. My simplified take on the situation. Dave Roberts seems to grasp this. Rick George certainly does and he has spent 8 million on stock at higher prices than today.

Yes, she has a long run ahead of her, like the guy in your avatar, or Zuckerberg, Gates, Page, Brin, or Jobs.

Every other investment society and career in the industry is available to women too in the USA. I find it strange that she devoted herself to two societies that lock out men. If Buffett came to my university to speak I would be quite frustrated to find out that only women were allowed. Yep, its a tough life Ian. Too bad you cant try being a woman for awhile and see what its like from the other side. I can guarantee you would immediately find yourself frustrated by things that you dont even notice right now. Being born male, and especially a white male in North America, confers immediate advantages on us. Why do you think Ms. Britt has had to be so ruthless? I bet people are taking her seriously now, after she has cleaned house a couple of times.

At the moment my gains are all mixed together with my pay check. So, In Canada your capital gains rate is 50% of your capital gains * your marginal tax rate (say 30%) = 15%. Once I lose the pay check my capital gains and income (mostly from US and UK dividends) will be used to calculate my marginal tax rate plus interest from cash accounts ( which is zero right now). The equation is the same. Since I can manage the capital gains lower by selective trading or buying puts For awhile I should be able to use about 10% as my tax rate. Using your 140,000 income stream in Can. would cost me 30% on the interest income. Less on the dividends (est. 20%), and 15% on the capital gains. So my goal for 2015 is to have 60000 from dividends when I dont have a paycheck. My wife works and we contribute equally to the family. My tax on 60000 dividends would be very low, contingent again on the total amount of capital gains and income. For tax and investment reasons I am using a HELOC worth 200 k to smooth my expenses. I am calling the heloc my 200000 in cash from above. We can write off debt against investment earnings so here is the final structure: brokerage account generates 30000 dividends today, 200 k HELOC to be used as cash source, and capital gains from investments. so I need roughly 30 k per year from the Heloc to avoid selling stocks. In up years it is not an issue. In down years the Heloc is used to cover the 30 k. Using debt in this scenario is a non-issue because the house is mostly paid off. By next year, I will be converting some BAC and AIG to common so my dividends will go up. Really, I should only need to dip into the Heloc during a market recession, when of course I want to buy stocks rather than sell. It sets up a firewall. for 2014: so: 60000 after tax in expenses 30000 in dividends today (pre tax) Capital gains (0 to 500 k) Heloc as back up. 2015: 60000 in expenses 45000 in dividends? Cap gains (0 to 500 k) Heloc as backup. Did that make sense? I am assuming you are preparing to leave your job, or you wouldn't be setting this up? al

Packer, What about taxes? The way I am doing this is to set aside 3 years of living funds in cash. If the market turns against the greater portfolio I will use the fund. Otherwise I will keep the fund topped up. This allows me to smooth it and break market dependence.

I agree with Kraven's advice. The job in hand allows you to negotiate into the next job. You can solidify the bonus requirements, if that is part of the equation, in the next interview. Also, if your employer gets wind you have something else coming play hard ball, if they try to get you to stay. That means everything in writing, including the bonus! Above all try to be patient and learn what you can where you are in the interim. Focus on your own development rather than what others are doing. In the meantime, keep investing. I know a guy, who started, right out of community college with an accounting diploma. The small company made flexible hose for all kinds of operations. He would get his accounting work done in a couple of hours, and go down on the floor and learn how to operate the machinery, install the hose, etc. Later on they made him part owner of the company because he knew more than anyone else and they couldn't part with him.

Absolutely great article. I especially like the being born at the right time. Another example is the oldies circuit playing stadium shows: the Who, Stones, Neil Young, Eagles, clapton etc. all from 65 to 73 years old. I think the plethora of "information" has added to inefficiencies. The London whale episode is the perfect example. JPM got hammered down at the time far worse than the actual losses were going to be making a perfect buying spot. This is repeated over and over. Bad earnings are a classic example as well. The internet, cheap trading and lightening fast trading have all contributed to make the markets more short term reactive. The prepared mind can be ready for these very regular over reactions.

Could the same be said of Fairfax? That Fairfax worked out only by the grace of God? Yes of course! That's why it's not really fair to call them a loser or winner. If investment managers make it 25 plus years, they deserve a little respect for not blowing themselves up well before that! Cheers! Of course, in 15 years when I will then need 40 years to prove myself. ;) Sanj, It has nothing to do with respecting Prem or not. He built a massive and successful company from scratch, using skill, honesty, and savvy. That is incredible in itself. That does not mean I have to invest with him right now. Your remarks about the difference being a few right calls that fell on the margins applies to both us DIYers, and FFH. Had BAC collapsed, those of us who invested at $5 or $7, would have moved onto something else. I took a major hit by betting on RIM, my biggest all time loser, incidentally before FFh was really involved. I got out and moved on. The same of course could be applied to the leveraged returns on FFh. Had that blown apart this conversation wouldn't be happening because all of us would have gone down, including FFH. The board would still be called Berkshire Hathaway Shareholders. But that is not the way it unfolded. Has Prem suddenly lost his marbles? I doubt it. Holders of FFh today should do reasonably well over the long term, and may do exceptionally well in a major downturn. But from my perspective, today, FFh is not the best place to have my capital. On a look forward basis I figure there will be sub aspirational returns for awhile yet. I, for one, am very cognizant of the possibility that it has all been luck, and it could just turn out that the EMH is nearly always right. Put another way, could you or I suddenly become crappy investors? I worry about this, and maybe that is part of the key. It certainly works for Seth Klarman. Prem, Buffett, and others have shown me the path to developing a framework that works for me, until today, at least.

What do you mean by that. My take away is two fold. One, the poll is not meaningful without knowing who formerly held FFH and no longer does. Two, if the results are meaningful then a group of value investors is not finding a lot of value in FFh right now, or there are better values elsewhere. Obviously, lots of institutions see value in FFH, since they never have trouble issuing shares, but that is meaningless to me. Thompson- Reuters has lots of shareholders and the stock hasn't budged for 20 years.

I agree with the index fund approach. People want me to advise them how to invest $20, or 50 k. And of course they have no idea how much goes into what we do. 20 hrs per week for 16 years. The other day I advised my Sister in Law to just pay down her mortgage. She is single, will have a work pension, and CPP, and OAS. She wanted to know if she should put money in an RRSp. I just told her to forget it and pay down her mortgage. Fastest way to retirement she will find.

"Part of my problem is probably due to the fact that my time to spend on this is relatively limited. Anyone else have a habit of hanging on too long?" I used to. I tell myself that I can always buy it back.

Phil_ : I am trying not to sound flippant. It comes down to a few things: 1) Conviction: BAc as an example - I have a rough target of 22-25 where I want to be down to a smallish position. I sell down as we get closer to the target, unless the aspirational target is revised upwards along the way, which it has been. 2) Experience: learning what works for me, personally over time. I trade frequently around a larger position which satisfies my restlessness. 3) Avoid full motion video discussing your investments: TV, YouTube type stuff, continuous news feeds. Our brains seem to be adapted to react to video versus reading and pictures. Other advice as above although I follow my stocks closely, I look for news if there is a sudden rise or drop in a stock. Usually there is no reason, so I do nothing. cheers!

bravo Sanjeev! and well said. For those interested in Corner Market capital go to the top of this screen and hit COB&F home. That will get you there. I hadn't ever noticed any difference in your posts one ay or other. To be sure there is more diverse traffic on here. A few years ago there would be hours and sometimes a day or two without a single post. Now the ideas section is very full with many awesome analysis. cheers,

Here is what I think is the simple truth: without equity hedges, we wouldn’t even be here talking about BBRY. It is as simple as that: no one here can stomach those damned equity hedges! But that’s the way they operate… And that’s the reason why it is so difficult to follow them. Gio Fully agreed Gio. And I would still be a shareholder. That bet has turned out to be an inverse of the CDS bet only worse.

I have a tiny position in Penn West. I held it for years when it was a trust. Then my interest got peaked again by this thread. It is amazing how much flux there is in this industry. Everyone is in a constant state of over buying followed by rationalizing their balance sheets. I dont know how Penn west will play out. However, Rick George ran Suncor for a long time, successfully. Rick is the Chairman of Pennwest and has bought a ton of shares. Looks to be close to 10 million invested. If anyone really knows how to straighten up Penn west it would be him. He probably knows as much as anyone about what's under the ground, and how to get it to market. The new CEO is no slouch either. For Resource companies subject to booms and busts, I absolutely want the dividend. The dividends impose capital discipline that is sorely lacking In this industry.

Try to get out tomorrow after lunch to get your vitamin D. I am betting you encounter a lot of drug and social problems in that role. Talk about life experience, wow.

Kraven has asked me to work for him on advising on matters of the heart...... Today I work as an Industrial Hygienist: chemical and biological health and safety in workplaces. masters degree in above. BSC in Geography/environmental science Worked in contracting, consulting, health care, and government. Have been in thousands of workplaces and looked at hundreds of work processes. Generalist at everything. Expert at diddly squat. 'Cept those matters of the heart....

Al, of course he has his inconsistencies! Yet, he is the one who created an $8 billion company from scratch. Not me, neither you, nor anyone on the board (at least that I know of!). Therefore, the real question is: has he lost his mind? From a first class entrepreneur, has he suddenly become third tier? Gio He has not adapted to having large amounts of cash available. It is all back to the argument you had on the other thread. If they are gojng to be in the insurance business they need to invest for cash flow, not lumpiness. If they are going to be a PE shop then this is fine. The high debt, and poor cash flow of this style is damaging the insurance operation. Again, I repeat: 1.4 billion could have generated a lot of cash flow directly to Fairfax. 150 to 250 million per year. instead it was thrown away on a speculation. Think about that while you defend them Gio. Where are you finding these businesses with sustainable cash flow yields of 11-18% in this environment? I want in on that action. It is tougher now, I agree, but it wasn't that tough less than a year ago. I have suggested companies that FFh has had past involvement with or is involved with now on other threads. They were cheaper last year. The thing is that FFh doesn't need to invest in BBRY. They have been issuing shares to finance this. They could just wait and gather cash for better opportunities. Bearprowler, still keeping the faith after all these years? BBRy is speculative due to the industry it is in. Everyone else from all sides is eating their lunch: Apple, Google, MSFT, Amazon, GM. Google is working on self driving cars - that sort of negates the QNX argument. The handset business is all but dead in the water. The security business has been attacked from all sides. I can see all this as a lay person. Mike L. Was the real deal, and Prem "liked the guy in charge"; same with T Heins. The reason it is speculative is because no one on this board or at Fairfax can tell me that the business has anything salvageable, or how they will make money next year, or in 3 years, or 5 years. And they are burning a billion here and a billion there, on failed marketing and experiments. They should have listened to Jim Balsillie who was pushing to get out of the handset business and focus on enterprise two years ago before he washed his hands of this.

Al, of course he has his inconsistencies! Yet, he is the one who created an $8 billion company from scratch. Not me, neither you, nor anyone on the board (at least that I know of!). Therefore, the real question is: has he lost his mind? From a first class entrepreneur, has he suddenly become third tier? Gio He has not adapted to having large amounts of cash available. It is all back to the argument you had on the other thread. If they are gojng to be in the insurance business they need to invest for cash flow, not lumpiness. If they are going to be a PE shop then this is fine. The high debt, and poor cash flow of this style is damaging the insurance operation. Again, I repeat: 1.4 billion could have generated a lot of cash flow directly to Fairfax. 150 to 250 million per year. instead it was thrown away on a speculation. Think about that while you defend them Gio.

Fairfax is scrambling to save their investment. This is costing more than anticipated by a long shot. Rather than getting out they are repeating a common mistake they do. They did it with Cunningham Lindsay, SFK via rights issues. They don't know when to get out and move on. Here is the thing: You don't see a lot of others lining up to invest in BBRY right now. Compare this to Seaspan where they decided to go forward with a stock issue Because of market demand. When asked about his investments Watsa has said "we like the guys in charge" many times. Sfk - Management got replaced and the company sold Tom ward - well we know how that ended Mike L. And then Thornstein There are others. To be fair to Prem, I have noticed his inconsistencies more than anyone else, because I have followed FFh so closely for so long. I am sure other CEOs in the public eye have their inconsistencies, as I myself do. I am struggling to figure out what business BBRY is in and then if it is going to be profitable, and at what level. Will it be profitable enough to sustain a $10 share price. I am pretty convinced that FFh hasn't a clue how this will turn out. This is not a case like Buffett investing in GE, or Goldman, or BAC where there are real live sustainable businesses in behind the morass. With BBRY there is nothing sustainable backing it.

$350 million. I agree there is an outstanding risk control question of how big of a position they will take in a given company as a % of FFH's equity and it isn't reassuring that Prem gives a poor seat of the pants answer. With that said, however, there is a large difference between another $500 million in BBRY equity and another $500 million in BBRY debt. Thanks for the cost base in BOI. I agree there is a huge difference between debt and equity. Risk is much less. It's the position size that bothers me. I would say my biggest issue with BBRY is that they took a huge equity position (when they had the Total Return Swaps on BBRY as well) relative to FFH's equity. That made absolutely no sense. What if the value of BBRYs carcass is zero. Then FFh has invested 1.3 b in an investment worth nothing. They are out of their circle of competence, and it's totally speculative. BOI I always understood because its a bank with real customers, a real franchise, etc. RIM no longer has a franchise. They may have patents worth a couple hundred million, but time has moved on, since the heady days of patent buying, and technology has moved on as well. 1.4 billion invested in a good cash flow business would be throwing off 150 million a year right now. I asked myself some really hard questions about FFh and have reached the conclusion, a year ago, that I am better off not owning it at this time.