Uccmal

I am generally not a fan of stock buybacks because so few are done well. In the olden days of Ben Graham and Warren Buffett companies with excess capital gave it back to shareholders as dividends. I know people will point out that dividends are tax disadvantaged but I still prefer it ro badly done share buybacks. I can only think of very few companies that do buybacks well. The vast majority of time buybacks are used to bolster the share price in the short term and mouth the words shareholder value. Dividends on the other hand tend to focus management on cash production, make shareholders wealthier, and help governments raise money.

I am still holding a 6% position or so in fbk. The creeping incrementalism with which they are paying down debt may allow us to buy more at low prices while things continue to improve. Management is doing the right things so far. My two worries are: 1) the commodity price 2) management doing something stupid with the cash. 3) 1&2 at the same time. There is alot of competition for my investment dollar right now. Many growing companies are paying dividends in excess of 4.5% such as SSW, MTL, SLF.

My broker TDWaterhouse provides INK reports, with every security that reports. I get Vickers for the US. Frankly, Ink is alot better.

Lets see. Assume the movie theater real estate, property tax, and heating/cooling, is paid for by the flicks being shown. Then we have: 3 students per concession section (2 movies) making $9/hour for 3 hours ~ $100 Sell to 100 customers per 2 movies: $8.00 per person = $800.00 Assume 100 servings of pop and popcorn: $2 cost per person. Cash flow = 800-100-200= 500/3 hours 10 theaters - 2 sets of 5 concessions = 2500 per 3 hours I have always understood that Movie theaters make the bulk of their profits from the concessions. Harold Ballard (of Maple Leaf Gardens and Toronto Maple Leafs) understood this in 1965 when he raised the temperatures during a Beatles concert to sell more pop. I guess the best way to prove Munger right or wrong is to read the Cineplex Report which i have not done.

Well, being an actor/musician isn't always associated with business brilliance. ::) Maybe he should stay to his core competencies.

James, Could you refresh my memory. FFH has not been an owner of KW until this point. But they have a major joint venture with KW. A.

Did anyone catch this: Paulson dumped entire stake in Sino Forest: http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/paulson-dumps-its-entire-sino-forest-position/article2068199/ Could be retitled: Another Guru's Reputation Bites the Dust. I have about had my fill of so called market gurus. The vast majority are no better than anyone on this board.

I dont think so. Company x takes a piece of itself "company y" public, creating 100 M shares of which it keeps 30 M plus the cash proceeds of the other 70 M shares issued. It adds cash to "x" but reduces "x" book value that was formerly attributed to "y". Essentially no difference for Company x except that it has now monetized part of its assets making it more transparent to stock holders and hence call option holders. It would be no different if a company monetized any asset.

That's priceless. Makes one question their mining tactics as well. "We hired 100 bushmen to do the mining dance at 15 locations this quarter. At 3 locations messages in the form of shooting stars were received indicating the presence of gold nearby. Voices from beyond told us exactly where to drill"

Claphands, 1) Reserving and share issuance. I dont think the issue had anything to do with intentionally agressive reserving. Alot of insurers were in the same boat and had to recap after the two consecutive years of hurricane cat losses. In addition FFH was trying to run down TIG and it was costing more than anticipated to say the least. 2)Finite Re- dont really know. It had become fairly common practice for healthy insurers to 'loan' money to those who needed some assistance. The Chubb re policy had the blessings of the California Regulator to secure parts of TIG. 3) Hempton - before my time - understand he posted under Brogalboy and the intentions were to spread malicious rumours.

Let's be honest with ourselves FFH fans. We were in deep doo doo a few years ago. What saved the day was the ethical conduct of Prem and crew plus the help of long time supporters like Cundill, Hawkins and Markel. twacowcfa, That sums it up really nicely. To say that myself and others on this board profited from this situation is an understatement - and we were never short. The finite reinsurance was either illegal, or at least offensive enough to the NY State Attorney, and the DOJ to result in substantial extortion by the regulators and the ouster of a few CEOs include Greenberg father and son. FFH was treading a fine line and I believe that they agreed to unwind these contracts with Chubb and Swiss Re to placate the regulators. It was not a pretty situation. The shorts took this info and ran with it to hell and back taking every advantage they could of the situation, legal and illegal. Similar to Sino Forest they were extremely vulnerable to short attacks, partly through their own lack of transparency.

The outlook reflects A.M. Best's expectation that the group will continue to outperform the workers' compensation peer group over the long term, as well as the support of Fairfax. My how things change. The ratings for NB and ORH used to read: "we are keeping NB on negative credit watch due to weakness at Fairfax, the parent company".

I have bought back a portion of the stock I sold earlier at the new low price, and with the news of the debentures being paid off. Even though they will initially need to use their credit lines to pay this tranche off the high P&P price will recompense them with cash flow. The overall savings from these varied small actions should create a bit of a positive cascade. I was responsible for about 8% of today's trade, so far.

I think that Hempton is named in the FFH lawsuit. He posted under an alias on this board, and the Yahoo FFH board. He could runs rings around legitimate shareholders by questioning and querying FFHs accounting. It was continuous and coordinated attack on FFH from fall 2003 through 2006. There was nothing upstanding or accurate about the statements. It was clearly designed to inflame and drive the price of FFh down. I dont see how this behaviour differs from outright fraud that companies use to pump up their own stock. Hempton should be doing a few years of cell time, the same as Bernie Ebbers.

With the way you are thinking, most oversea companies will not be invest-able? Alert, If by overseas you mean companies where I cant possible investigate anything than yes. The same would apply to Junior Mining companies anywhere which I avoid like the plague. I dont think that rules out companies like Barclay's, Carrefour, Tata, Sony, or Tepco for that matter. Nick, That is an interesting perspective. Increase ROE by increasing debt. I haven't looked at the numbers close enough. Glad to see your still around.

I have started this thread partly to get myself clear as to what exactly one can determine about Sino Forest. I held this stock in and around 2005/06/07 and was out of it early in 2007. At the time I was up to date on the financials. I have a moderate understanding of logging, forestry, and the P&P industry. I exited it because it had risen well beyond its stated book value and was no longer cheap on a PE basis. I never held a huge position in it. There were other investments available that were better at the time. Maybe 10% at the absolute maximum looking back. So, if it is/was a fraud I was blissfully not paying attention back then, and consequently did very well with it. I have thought alot about what I have written. I have not read the financials recently. What can I prove is true about Sino Forest: 1) They have audited, published financial results. 2) They have an audited forestry asset assessment by an Asian company: Poyry 3) On a reported financial basis they have performed very well. 4) They have a website with numerous documents. 5) They have a BOD made up of Canadian, and Asian Directors. 6) They have a Canadian Chief Financial Officer. 7) They have raised enormous amounts of money in debt and IPOs. What am I unable to prove about Sino Forest? 1) I have no way of knowing what they are doing with their cash. 2) I have no way of knowing if they own the forests they say they own. 3) I have no way of knowing if the forests they say they own actually have marketable trees. 4) I have no idea where the money is. 5) I have no idea if they are selling the forest/trees/products they say they are selling. 6) I have no idea where their end product goes, what it looks like, who buys it, or what happens to it. 7) The forest auditors, and Ernst & Young have no idea either. They only have a sampling of data/forest provided by the company. 8) Their Canadian BOD and CFO really have no idea if there is a real company of said size behind the faces they see, or the trees they see. We saw this very clearly with Hollinger International. 9) No one outside of the inner circle of the company could tell me if the financials were accurate and they have no way to prove it. If I go to China and check into their operations: 1) The company rep could show me anything and tell me anything and I would have no way to verifying it. 2) They could take me anywhere and I wouldn't know where I was. 3) They could show me piles of cut wood, pulp, wood chips, and tell me it was theirs and I wouldn't have clue one way or the other. 4) They could take me to their offices and show me people, and I would have no way of knowing who the people were, who they worked for, or what they did. When all is said and done the only thing they could show me is cold hard cash in the form of dividends they were paying over a long period of time that were being raised a couple of times a year. They would also need to keep the cash in trust with an American or Canadian financial institution and show me exactly where the money was going when it was spent. This all differs from Canfor, based in British Columbia. With Canfor I could start by going to Home Depot here at home or anywhere in NA and looking at the stacks of lumber and reading the Canfor labels. I could ask Home Depot, Lowes, etc. who they buy the Canfor labelled lumber from. I could ask them how much they sell, roughly, and if this was similar for most HD outlets. I could then fly out to British Columbia and ask to tour one/or some of Canfor's plantations and licensed holdings to assess the amount of timber they hold. I could cross reference this with Provincial records of holdings. I could do all this without having to bribe or pay anyone. I could rent my own 4x4 and drive myself with a GPS so that I knew where the holdings were and cross reference with the companies records and the government records. I could then go to a Canfor lumber mill, and the CFX P&P mills, and look at their operations. I could call someone from the BOD or management and ask them all about the company and if I could meet them at their offices for a brief tour. I could talk to their auditors and know that the auditors were not being significantly fleeced because I had independently verified that things existed and indeed belonged to Canfor. The same applies to any of my other holdings such as MFC, RUS, WFC, BAC. Any of these companies may have divisions that might be a little sketchy form time to time but odds are against companies that we see and interact with in our daily lives being complete frauds. I simply cannot do even the most basic of assessments of Sino. I am 100% at the mercy of their own publications and say so. This is what makes Sino such an easy short attack target, and makes it impossible (so far) to refute claims that it is a fraud. So, From a G&D, Watsa, Buffett perspective: Does Sino Forest have a margin of safety? At any price? I would have to say no. I cannot attach a value to it by any known measureable standard at this point in time. Finally, we will all have lots of time to invest in this. I would not expect it to turn very quickly if it proves to be the real deal. Please do me a favour and dont turn this thread into another discussion on MW or I will ask Sanjeev to delete it. We already have that thread going elsewhere.

Bloomberg has some aweful writers. What the hell is up with that piece - 1990s hiphop...... LOL Myth, At least their spelling isn't awful. :P

Estimated Profit, I hear you...Should Sino be correct, and honest then there will be buckets of lawsuits and Muddy Waters will be toast permanently and Carson Block will be out of business permanently. At worst it is an exercise in transparency that will benefit Sino in the end. They will be forced to go above and beyond. It is too bad that Sino is not listed in the US where the SEC would have jurisdiction over MW and Sino. If Muddy Waters is correct then they will have made their reputation (and their money). There were roughly 20 m shares sold short. Assumming MW held 15 of these then he has made somewhere between 100 to 150 m. That's alot of incentive to produce a report of 40 pages in length with appendices. The outflow from that would also give the 'infomants' of MW alot of incentive to fake reports and results. Time will tell on this one.

ubuy2wron, My apologies. I did misunderstand your post. Sorry about that! Alertmeipp, you probably convered the scenarios above. RE: John Paulson - I would think he would have sent some people to China to investigate the situation first hand given the history of Chinese companies of late. I of course dont know this. Hester, I am not paranoid by nature. I am just figuring that Sino is a perfect target if this is a short attack. They have no way to verify their business to investors. MW has set it up in such a way that no amount of persuasion would work. All that Sino can do now is to do a press conference, install a dividend of a significant amount, and put the money into a trust account for the first couple of years of dividends. Then carry on with business. If they are legit they will be forced to a higher standard of accountability than most public companies. That would not be a bad thing. I am guessing that time will tell. If one of the major shareholders tries to unload that will kill the price completely.

hester and ubuy2wron, Sino may well be a fraud but neither of you have a clue what you are talking about in terms of short manipulation of stocks. Many board members here lived through the FFh short attacks. We saw first hand the extent to which short manipulators will go to do develop their own credibility and try to take down a company. Muddy Water's only says that he had 10 people working on his behalf for 2 months. What if they were falsifying information to him in this case? He does not divulge his partners because they may be in danger - fair enough. Then we need to apply the same standards to Muddy Waters as he is applying to Sino and I dont see either of you doing that. Such as: Who is giving him information? Is he honest and credible? Was he the first to spot fraud at those other companies or did he just make it look like that? What is his address? Where does he live? Can you actually comprehend the documents he has presented and what they mean? We are relying on his interpretation of them which is not good. We have no idea if he himself has perhaps forged them. He could well have been working on this for years and forged everything. Finally, he may well be right but you need to hold him to the same reportoing standard as Sino. I could go on for hours but it serves no point.

Hester said: The comparison to the FFH episode is crazy. This is much more analogous to CCME. One comment even suggested that MW set out on a plan to get RINO, CCME, DGW, and ONP right just so they could convince people that they are legitimate and get a big manipulation hit on Sino. This theory is crazier than the Obama birth certificate and Osama still alive conspiracy theories put together. But really, the history of MW shouldn't matter, the similarities to FFH shouldn't matter. The only thing that should matter is the facts, and the MW report has 40 pages of pretty damning ones. This was directed at me. Hester, truth is stranger than fiction. You are obviously familiar with the FFH story. When Muddy Waters raised the name Hempton with Herb Greenberg of all people it raised flags all over with me. It is entirely plausible that a skilled con man , Block, could over a few months set up a con to take down a big company like Sino and make a fortune without ever being accountable. Why would this be any less plausible than Sino being a fraud? Are you short Sino?

Maybe he's wrong this time. He has jumped a magnitude in size for this one versus the others. In a Con game the first thing to do to make the big score is to develop credibility. The next thing is to exploit it. He may have made a few hundred grand shorting the others. This one he is probably made in the 10s of millions now. Quite worth the background work even if you are utterly full of it, wouldn't you think. Sino's track record 15 years. Muddy Waters - 7 months. I have no stake in this although I may take one.

rijk, That video is a real treat. It's got all the usual suspects that were involved in the short and disort campaign at FFH: Herb Greenberg, John Hempton. Only missing SAC and Spiro (oh he's dead) for a complete set piece. Now we add Mr. Block.

Trading Halt is still in place. My guess is that no news is very bad news. I cant imagine that Chinese authorities are going to appreciate this very much. BTW: I am not returning my profits. :P. I will donate the money for the greater good when I can afford it.

I have learned through the school of hard knocks to avoid options on the Canadian exchange like the plague and Alertmeipp just confirms my bias. Once into a position you are essentially stuck until the exercise date. No offense Alert - I have been down this road with Celestica and still hold some MFC options that I cannot get rid of. I hold options on RIMM via the US.