Uccmal

Now, Can someone help me clear this up. This would apply to certain preferreds and debentures but not the warrants. The warrants were sold by the US treasury into the public markets as a way for the US government to recoup its investment. The capital with Wells invountary 'blessing' went to the treasury. So it is not relevant for Wells to redeem these particular securities except that it reduces stock dilution. If these were converted all at once and Wells issued stock for them then the Core 1 capital ratio would actually increase as more paid in common stock would be put on the balance sheet. Am I out to lunch on this. Feel free to tell me. I hold 50 gs of these things and would like to keep them for their leverage effect going forward.

Sanj, I dont know Francis' specific situation but I have met a few other "Indian" Chinese and they still all speak the old language. And you certainly know many Chinese in Vancouver that still speak Chinese at home after multiple generations. Anyway we are way off topic and you are correct that I made a cultural assumption. Al.

The line up for lawsuits have already started according to the news feeds. By the time Sino's lawyers finish with the carcass the entire company will be worthless, and all of OECs unrealiable cash will be spent. No offense to anyone on this board but I would not touch a Chinese listed stock of any kind until there is some sort of rule of law. Reminds me of the circus represented by the Canadian junior exchange only worse. I have been buying Leaps on more companies with real GAAP accounting in NA, and the UK and that is bad enough to have to weed through for the truth. I have no issue with NA/Euro/Asian multinationals that do business in China. They have people in place who can manage things on the ground, where necessary. In retrospect when I owned Sino 4-5 years ago I never really understood what was going on. It was purely a numbers play. Now I know why Francis never held it, and he has a language advantage over me.

Barge pole... Barge pole... Good grief.

I got thinking about this via the thread on Tre, with Myth's comment of wading through crap to find the hidden deals. Types of value: 1) There is cigar butt investing which is what Myth is alluding to. Probably due to lack of time, with two little kids, and a full time job in addition to investing I find this the least lucrative method. If I go through my past holdings I find a large assortment of really crappy companies with low liquidity, in cash strapped industries. Very few with more cash on the balance sheet than the stock price. Maybe I was investing at the wrong time. Anyway, it seems to be probability based. 2) Bizzarely obscure companies in strange industries. For this I refer to Irwin Michael of ABC funds who seems to relish in this type of security. He gets good returns, excepting 2008/2009, but very few others do, including me. This appears to be probability based as well. Credit to Irwin for finding SSW though which has been one of my greatest hits over the past 3 years. 3) I do best at finding great companies at low/but not by any means, net-net pricing. This requires patience as well. Times like this past winter and spring put these out of reach. Into this I would put GE (today), RIMM, WFC (today), BBY (today), BAC (today), RBS.PR.P (today), FFH (today), MTL, SSW (today), CFX (not today). I especially like companies that are generating free cash, and have low PE multiples. For this one doesnt not need to look hard but needs the patience to wait for cheap times and possible ride your stock down with a market slump. I find it easier to stomach the churn when I know I can dump the stock without too much pain. Thoughts, Wont debate my choices in number 3) which have been debated to death.

Munger, I beg to differ on whether or not GE was a terrible investment after Buffett bought those preferreds. I bought Leaps on GE at under $10 and it was one of my greatest hits. I still buy LEaps from time to time on Ge when it drops below a certain price and reduce above a certain price. Small part of overall portfolio but very lucrative. To your statement I would not invest in GE common as the maximum return is probably under 50% from here in the next couple of years. I have held BAC for months in various forms and it will now be another greatest hit. The wildest part is the actual percent of my portfolio is so low at this point.

Great thread everyone... Munger, You might consider changing your moniker. The real Munger was not particularly risk averse. He was known for borrowing millions and pouring it into a good idea. Now, I can appreciate that BAC is not a good idea where your concerned. Al - long BAC via common and leaps now. ...not the same uccmal as the idiot on the BH yahoo board

tombgrt, Somewhere in the ether is a prospectus of the warrants. I'd rather not guess since I read it months ago. I dont see acquisition happening. They are too big. Re-cap is the more likely scenario if it came to that. There are plenty of private investors who would lend for a higher yield than treasuries. Other options include partitioning Countrywide - I suspect this is what Moynihan has met with the regulators about, or selling more assets. The government doesn't want any major bank failures and will do everything in their power to stop it. Low interest rates and QE programs are specifically to bolster bank balance sheets to facilitate lending.

I know your kidding... It's more likely the poll is worthless and shows the disconnect I have with american banking. In Canada chances are very good that if I posted a similar poll for the big five banks each one will get about 17%. With thousands of banks to choose from in the US it doesn't take very many citizens by percentage to be the largest provider of basic services. Banking tends to be a sticky service - I have never changed my primary bank CM since I had my first account in the 1970s.

For fun and profit. I was in Boston recently and must have used BAC two or three times to withdraw cash from my CIBC accounts

Great article, Sanj, What is even more incredible is he started his present firm in 1978 when he was 73 - most are retired by then.

Good point Alert, Extremely cheap debt issues have been done recently by JPM, GE, MSFT, Brk, and other large caps. One needs only look at that particular list to see who will have outsize returns going forward.

Schiller 10 year pe chart has been pulled out by some uber bears to indicate the mkt is not cheap. The kind of valuations that will make one pull the trigger using Schillers criteria come along not too often and an inordinate amount of money can be made buying individual companies that ARE cheap. Unless you are just buying the index it pays to pay little attention to Mr. Schillers data I have been able to compound my dough in the past 12 years at a mid teen rate investing in a mkt which has by his definition too expensive. Its a mkt of stocks as well as a stock market. I can find plenty that seems cheap enough to pull the trigger on days like today and hopefully tomorrow too. Using Schillers data you might only get one or two swings of the bat in ones lifetime. too true... By this measure markets have been overvalued my entire investing career except a few days in Mar 09. Walter Schloss was always in the market with hundreds of stocks and had consistent 19-20% returns over nearly 50 years. I dont buy the market.

I always wanted to thank Dcollon for this thread. One of the Preferred issues that looked okay back then I have held ever since. Royal Bank of Scotland: RBS.PR.P on the NYSE - 0.0625% on par value of $25.00 I have quadrupled my position in this in the last two weeks. It traded up around $18 last winter and has sort of been in decline ever since. Right now the yield is around 13%... It is trading at 50% of its par value. Now for RBS - I am by no means an expert on the company. However, they have passed all the stress tests they have been through. We are at least a year away from the worst of the mortgage morass. Their core capital tier 1 ratio is 11.5%. Obviously they will feel some effect if a major Euro power defaults but that is built into the stress tests. Finally, correct me if I am wrong but I have not seen a bank anywhere default on its preferred shares completely, that has remained a going concern. RBS thought these securities were cheap two years ago and tried to buy them in at $14.00. I dont think they got too many. The float still seems pretty robust.

I haven't kept up with their bond portfolio lately but I expect they will report some large realized gains for Q3. I just dont see them standing pat. Around 3 Billion in US and Cdn Treasuries at year end.

HPQ holders, and RIMM detractors will appreciate this. http://www.financialpost.com/opinion/business-insider/TouchPad+Best+wants+Hewlett+Packard+take+them+back/5267939/story.html Makes RIMM look pretty good in this space, relatively speaking. I have two HP laptops but both cost well under $500.00 - I cant imagine the profits are too good from these products right now.

Sanj, I would also suggest, without knowing him remotely as well as you, that Francis does his analysis and sticks to his Graham style of investing no matter what. He works on statistical premise when he buys a stock and assumes a certain number wont work out. He also assumes that he cannot know which stocks will rebound ahead of time. His style is close to that used by Walter Schloss. He has infinite patience. In fact, if you ask him for advice as a friend did at the meeting this year, he will suggest that if you have done a good analysis up front you just need to be patient.

As per Rkbabang comments; I dont see any value in the Kenmore brand whatsoever. I used to work for a sub of GE Appliances that made Kenmore Appliances. Recently bought a Kenmore washer and dryer made by Samsung. Coincidentally, when I worked for GE I visited a GE Capital branch that built PCs for: HP, Compaq (at the time) IBM, and a couple of other no more brands. The truly bizarre part of all this was that it was done in the same rooms, side by side. That was quite a few years ago. I imagine GE is doing the same thing somewhere in Asia now for Apple, Gateway, Dell, and others. re:RIMM: I dont see it as a value trap, yet. A value trap would be a company that continually promises and under delivers. RIMM has very clearly articulated their present issues, and is sitting on a mountain of cash, and is being scared into action. Whether or not this company will deliver going forward is open for argument. I happen to think they will. I like RabbbitsRich comment: come back to this thread in a year or two and see what the mobility/laptop space looks like. Obviously AAPL is the elephant in the room right now but things change very, very quickly.

Sears Holding for sure. Buffett used the cash from Berk quickly to buy the Insurance companies. Within a few years of taking over Berk he had issued bonds, bought Insurance companies, used these to buy Blue Chip, Wesco, all before any of us could have bought Berk because it traded by appointment only. Lampert has not shown in nearly 10 years that he is doing anything to diversify Sears from its model. Fibrek, formerly sfk pulp, is starting to fit the mould - they will have things sorted out by the time the next big down cycle hits. I have to wonder how bad the demand for pulp may get with the advent of tablets and more and more free Wi-fi. They are going to need some Capex infusion sooner or later to remodel plants that are wearing down. Torstar has traded sideways for years and shows no signs of innovation, financial or otherwise. Recall Liquidation World - now part of Big Lots. $5.00 in 2008 got you 0.30 in 2011. BAM - needs to raise it's dividend to 4% and implement progress dividend increases. Overstock.com I have held all of the above. One I have avoided: TRI. The point about the S&P500 is interesting. Shows the advantage of being disciplined and selling/reducing as things rise and waiting for a retraction. Would AAPL have ever looked like a value stock I wonder or has it always looked overvalued at any time in history. I dont think anyone could have predicted that AAPL would have succeeded the way it has. Things that look like value traps but probably just require patience: US banks, GE, KFT, JNJ - the banks when they free up of the mortgage morass may look like they have rocket fuel under them. Al.

Another reason to just assign a chunk of your portfolio to FFH, leave it alone forever, and avoid most of their underlying holdings. I generally have not done well holding what FFH holds. FFH itself is due for another leg up.

Whether or not FFH is right about deflation is not that relevant. That they have covered that eventuality, and also another market crash is what is important. They do think several moves ahead of general economists, and are often right in the long run. The equity hedge is designed to protect their insurance portolio equities. This is all so incredibly astute as to be unusual. If/when there is a significant market crash there will be a handful of insurers who have a worldwide presence, and have enough capital left to write alot of profitable business. Buffett doesn't appear to use a significant amount of similar hedges. He has structured BRK to generate capital even in the worst economy in 30 years in the US so he doesn't need to. His cash flow and cash cushion is the hedge. Buffett also has the advantage of greater intelligence via his wholly owned subs than anyone other non-government person on Earth. When he says the US is unlikely to double dip he actually can back it up with data ranging from port shipments, to energy sales, clothing sales, machine and tool sales, etc. etc. etc. I am happy holding roughly 30% of my capital in FFH. It is a natural hedge for me against market downturns, inflation, or deflation. The recent plummet seems to bear that out.

I have nearly sold completely out of fbk. About a 90% reduction in total holdings. My primary reason's are the following: 1) there have been many better values available than fbk offers - i.e. SSW below $13 with a 6% and growing dividend. 2) this is beginning to feel like a long term water treader. Indications are that pulp prices are on the downswing again. I expect Fibrek will get by okay but I am no longer expecting gains of any significance at this time. 3) I dont ever see them getting the stock price up again when cfx pays a 10% yield and is awash in cash. I took roughly a 10% loss on my recent sells. However, In aggregate I was way up this time around (since 09) because I bought alot when it was much cheaper than today. This is not so much a bashing of fibrek as what I have stated in number 1). Management is doing the best they can as far as I can tell but they are battling numerous headwinds dealt to them earlier in the 2000s the major one being the US plants. When I see them actually building their energy plant, and stabilizing their US pricing I will revisit. My feeling is there will be plenty of time to change my mind in the fall or winter coming up if I choose.

Awesome idea from the group Sanj. You have my full support and a little bit of cash too. Thanks, Al.

PWF-tsx - Reported 20% growth in earnings yesterday - went on sale today. JPM - 2013 Leaps - small position - hard to resist after they sold 1.2 Billion of debt at dirt cheap rates yesterday. Small amount of FFH during the late afternoon. Some GE 2013 $15 Leaps nothing new for me, just retreads.

Not pretty. He really miscalculated this. It goes to show you that no matter how thorough one may be things can go against you all at once, especially when you are undiversified. When you offer funds without redemption restrictions you are really behind the 8-ball at times. Berkowitz is likely right about the long term prospects of most of his holdings. He just wont have very big positions when they are realized. More evidence of the investing genius of Buffett and Fairfax. No one is pressuring them to sell their stocks and there is no need.