Uccmal

You know, I dont understand comments about the opaque structure. Aside from actual non-bond holdiings there is really nothing that isn't disclosed in detail. David Baskin should read the damn AR - maybe that would help him de-opaque it. For our American holders Baskin is a near daily talking head on BNN.

Shouldn't the very low bond yields drive price increases? At the very least it will drive a reach for yield again which should crush most of the insurers in time. I would expect part of the hardening market will be driven out of eropean bond haircuts. Most of the larger entities have full euro ops.

Hi yudeng, good to see you.

My point is getting lost. I have watched this happen during my investing career a few times. Everything about apple is unsustainable over the medium term let alone the long term. Simply put - Show me one company that has ever maintained the kind of growth in momentum that A has. It has never happened and never will. Its not because A is a bad company. Its because competition or new ideas will materialize from somewhere and compress margins, or they may fall out of fashion for no reason other than consumaers are fickle.

Yes

Apple is priced to perfection. Sprint had to sell the farm yesterday just to have the pleasure of carrying the I-phone. In this environment that type of moat can evaporate. Being first in the coolectove conciousness never lasts. If Apple loses the momentum for one quater carriers will push back on pricing, as will app developers, and evryone else who is presently being reamed by Apple. They are starting to hit roadblocks at evry turn. RImm is curing their app problem. Samsung and Apple are slagging each other in court all over the place. Samsungs tab is hung up by Apple. Samsung is not taking it lightly and is trying to block the new phone. Then there is the price for the consumer. If Htc, samsung et al sell the same device as apple for cheaper apple may find themselves in a price war. Margins across the phone business are going to erode. Without jobs visibly at the helm they could lose their cool edge very quickly. I figure apple is moving from fast grower to slow grower now, or at least very soon. When that haapens and the pe ratio or pcf ratio moves into the double digits the stock price will level off to say 150 per share. It is really a question of when. The typos are due to using my Ipad which is truly a great device but certainly duplicable by anyone else.

I am pretty much standing pat right now. I'm all in and cannot find anything new thats better than what I hold. I upped my stake in FFH before the recent runup. Due to every other stock in my holdings being down, except a small stake in BCE, FFH now makes up 50% of my holdings. From my perspective FFH offers nearly as much downside protection as Cash and certainly has huge upside. I would argue that in a normalized environment it would be trading at at least 600. Also waiting for 2014 leaps to come out on BAC, BBY, and GE. Would like to buy more SSW which will likely raise its dividend to $1 shortly. Would like to buy more CFX, MTL, and a couple of others. I was a little early to the party as usual.

Two things I would like to see beforeI reinvest: 1) share price below 50 cents. 2) the power plant being constructed

Hey all, have a look at CFX - shares are way down. These guys have everything that one would want from fbk after the full turnaround. Cant say whether they will maintain the distribution but I do know it wont be going to pay for power or service debt.

I concur on Apple. The mobile business is going to get hit from every direction. It will drift toward a MSFT style good growth model with a stock price 50% of what it is today. I also concur with Kodak.

FFH is not just throwing darts at low PE stocks. They have a team of analysts. Take Dell for example, since I refuse to discuss the other any longer. They have analyzed every part of the existing business, very deeply, and determined that the stock is cheap. Then they have done a forward analysis on what might happen with Mr. Dell back at the helm. Analysts, perhaps even Prem himself have likely met and spoke with Dell himself and his management team. The depth this group is looking to for a large investment is probably deeper than any other analyst in the business. The "I like the management script" is polite Prem speak for we dont discuss our common stock investments. With LVLT, they are insiders, and therefore have information not available to the public. As for the company I wont discuss I can guarantee that Prem knows the co-CEOs personally, and probably quite well, and that some of his team also know them. Prem is the Chancellor at the U of Waterloo, which has one of of the most highly regarded computer engineering programs, financed in part by the local tech companies. Recall Buffett interviewing Jack Byrne at Geico, prior to investing. The same thing is going on here. They know exactly what they are doing. I guarantee they have looked at every data point available on every investment. Of course not all their turnarounds will turn, hence the diversification.

Hi Ben Graham, FFH makes a good hedge but not perfect. Cash is as close to perfect as you get. Holding 100% FFH is probably not the smartest thing either. In the event of a major American or European disaster FFH will get hammered along with everything else. Even Prem doesn't have 100% in FFH. He's probably pulled out at least 50 million since 2002 in dividends. Sanj, is also restricted in his ability to hold any one stock, lilely find better deals, so cash is not an unreasonable substitute. There is also the possibility of redemptions at any time. It doesn't serve ones results to have to sell FFH at $250 two weeks after an US East Coast tsunami. 50% position - more than I'd like but everything else is down.

I was just looking through Royal Bank of Scotland's derivative book last night. Much of the time the derivatives on the liability side are counterbalanced by the derivatives on the asset side. This is managed through their Global Banking platform. I didn't go into extreme detail on the matching but it seemed relatively even. They appear to be collaring much of their derivative exposure at the high and low ends.

Thanks username, Interesting that they have Society Generale CDS with Deutche Bank and DB CDS with someone else. I would expect the configuration to be the same for Northbridge, and the other subs.

Interesting comment from him about the Japanese Life companies. 7/10 went bust. Thinking of AIG in particular, and maybe MFC, and certainly others I am not aware of. (I'm bearish on MFC since the rally in bonds and long term rates)

Thanks dwy000, worth its weight in gold.

I dont know AIG specific. For durations you could look at Fairfax's rpts since 1998 when they bought TIG which was subsequently put in runoff. Workers comp is extremely long tail. FFH commuted - bought out-some of those contracts to close them permanently. The rest is mostly run down after 12 years but is a sort of near permanent small drag. Again, not knowing AIG very well , but knowing they have a huge Life business. With brutally low interest rates this business is going to struggle for a while. The lifecos all tanked after the Twist. I think AIG is literally the most complex entity in existence. I wouldn't touch it. BB will do all right but then he hires consultants to study various facets of the business and has a much better grasp of banks and insurance than most anyone else.

I penjoyed your review. Thks.

I would say unlikely is an understatement. FFH shares are expensive compared to the investments they could make in other areas. They will assess and go where the best returns are.

James, I am not convinced they will sell anything. There is a degree of re-investment risk. This capital has to stay liquid so they would have to move the long bonds to the short end. Anyway, we shall see in a few weeks what they are doing. Al.

To look at Dry bulk shippers consider Genco, GNK; Dryships, and others. Their stocks have started to turn, I suspect in part related to the drop in fuel price. The investment FFH, Ross et al have made is to help finance the biggest, and newest tankers. As time goes on Environmental Regs. and fuel costs have been obsoleting some of the older fleet. Overseas Shipholding (OSG) has a mountain of info on this industry and the politics around it on their website. It looks from the press release in August that they will be building a couple of LNG tankers as well. These may go to use moving gas from Vancouver to Asia in the not too distant future.

That about sizes it up. Everyone else is buying long bonds today. The usual collective insanity has set in. That hefty 2.8% yield on the 30 year. Can you imagine locking in your returns for a theoretical 25+ yrs at 2.8% - say 2 % after tax. You can get bigger dividends from dozens of stocks from companies that are cash rich.

I bought a very small number of $25 - January 2014 WFC Leaps this morning. I am very tentative at the moment. Aside from SPY Leaps WFC are the only ones I have seen for 2014 that are out yet that I was interested in. Biding my time a trying to be patient. Others come out around October 14th - I think BBY, and the final ones November 14th - GE, BAC, JPM,

I scanned the Annual and most recent Q and cant find details on the CDS and what they are holding except that they were in deficity at both periods, and the notional is 3.5 B. Add to this the S&P hedge, the deflation bet, the long bond holdings. I am totally guessing at least 1 B in gains in the past few days - offset somewhat by some less than stellar equity holdings. The interesting thing is what the equity meltdown, disasters, and bond behaviour will do to other insurers who are not so well protected. A goodly portion of the huge P&C surplus must be getting wiped out right now. FFH is still my largest holding by far and for that I am grateful. For this climate they are much better investors than I am proving to be, so far.

OEC, that is definitely the "post of the year". You have given me alot to think about in one short summary. BTW, Prem wanted the same P&C type float as Buffett because there is no chance of a run on the bank when things turn sour, like right now. Whenever he has been asked about getting into the Life Business, every other AGM or so, he says the same thing. Life is subject to sudden withdrawals.