Uccmal

That is what I was getting at Dazel, but better said. ABH, Tembec, or Domtar could easily justify a Billion Dollar purchase of these mills by integrating them into their overall processes. They could realize savings by eliminating an entire tier of management levels. There would be no more need for contract negotiations for wood chips by either side (CFX is an example of this). A larger company would simply pass on the pulp to a division that makes the paper, eliminating a sales force and European sales brokers. I expect the competition is just waiting to see how the price of pulp plays out and making sure each of them has their own house fully in order first. The bio-energy is a particularly interesting asset. It effectively insulates the virgin mill from fuel price shock which may be looking pretty good in the near future to an acquirer.

If they were operating like Canfor Pulp, without debt, and associated servicing costs the cash flows would be much higher. There is alot of value in this operation that is being overlooked at the moment partly because of debt load, low cash flows, better off competition, etc, etc, etc. There is also the specter of a declining pulp price that is overhanging everything. And I suspect that people are worried about this CEOs comments now. I was not one of those selling yet.

Under present circumstances it generated 47 m in cash flow last year. As I mentioned above, the replacement value is much, much higher. They are spending up to 2 Billion on a similar operation in Tasmania. FBK has other non owned infrastructure already in place such as roads, shipping capability, customers, etc.

I was just reading about a new pulp mill to be built in Tasmania by Gunns Ltd. The cost estimate is 2 Billion for a capacity of 750000 tonnes per year. FBK produces nearly that amount of pulp. Say its plants have a residual value of 1 B/130 m shares = 7.70/share replacement value. Probably not unreasonable. Even looking at the D&A shows that this company has assets of 440/130 = 3.40/share. which I feel is very undervalued. Their mills all have easy access to markets and transport. Cash flow numbers for 2010 were 47 Million after a very weak start in 2010. Cash flow this year could be north of 80 million which will eliminate all debt. I am certainly not keen on the CEO trying to vertically integrate this co. I would like to see the debt eliminated and any projects financed out of cash flow.

Its hard to tell whats going on from this press release. The MD&A should have a better view of the overall financial position in terms of the revolver, and the cash flow. At first glance the results looked ugly but there are several stepwise things that are changing the face of the company. No big acquisitions, please, please, please....

I cant quite resist, this. What is with all the macro-economic stuff on this board again. ;)

cwericb, As far as I know fbk is the only significant producer of RBK hence why there is no index quoted price. I was looking at the additional power output they will be adding. It looks to me to be about 3-4 Million per year at present power rates (6c/kwH). If rates start to rise it will equate to a higher dollar value whether they grid it, or use it themselves. Considering the cost to build the plant to FBK is nothing it is not a bad deal. Nice website!

Cardboard, That makes alot of sense. Since the delisting and without the options I am finding it alot less lucrative to own FFH. Partly why I asked. Thanks, Al.

Oil. Other fuels should have some overflow effect as well. It is only a matter of time before flows to Europe and China start to get impeded. I for one am wondering where all these dictators are going to seek asylum if Saudi Arabia starts to have issues.

Yeah, Thanks Sanj. I discovered the board in fall of 2004 when I was searching for something to explain the wild fluctuations and depressed stock of FFH. I recall Dazel posting, Sanj of course, Bsilly, Cardboard, Crip, Uhurupeak, WhiteSamurai, Smazz, DFCanuck, Numquam Perdo, Sleepless Twindaddy (who is no longer sleepless) and others. It has been over 7 very prosperous and educational years.

Cardboard, Your out of FFH entirely? Fed up? Better values elsewhere? I find that hard to believe at the moment? Gone to cash? I keep a sizable FFH position in my RRSPs - well protected on the downside. It still makes up my largest position in the non-registered accounts. If I could find better values than a depressed 15% grower at Book value than I would sell but nothing is compelling enough to justify taxes on the gains I have this year. I have probably taken 100 k in gains since January 1st as it is. Can I take this as a buy signal on FFH. ;) BTW: I dont think FFH can budge the stock price right now. They certainly have alot of cash but would be required to make a formal offer to buy in 500 M of stock, when it trades a couple of million per day at best. They might be able to pull in a few hundred million in stock if the price stays at this level for 3 or 4 years.

Glad to see Zuckerberg had the sense to wear a nice shirt to meet the president.

Alert, Are you so sure things are going to burst? It seems to me it is entirely possible that we go up 20-30-40% from here. Then we burst and go down 30% which puts us slightly below where we are right now. To my mind things are only beginning to heat up. There are several business cycle factors in play, and I dont think the cycle has been repealed. If anything the excessive stimulus will make the cycle more pronounced. Off the top of my head: bonds rally (done), then commodities rally (we are in the midst of the biggest commodity rally in a long time), then stocks rally (started, midway?). What if we get a stock rally as strong as the bond and commodity rallies have been. Coupled with that is that there has never been a down market in the 3rd year of a 1st presidential term. On the main street side business spending has just started to pick up which will get the jobs machine rolling just fine in time for the next US election. The rise in jobs should reverse the housing slide and create a virtuous circle. My guess is that federal deficits in the US will be much less than expected due to a stock market rally and increased spending. I think you wait for the election to see a significant bear market. BTW - I dont invest macro in a general sense but I do protect myself from macro events. As value dries up I have been reducing positions.

Ok22, No argument on the conference calls. I wait for the transcript. oec2000 has asked some really pointed questions at the AGM, as have a few other board members. Prem himself was essentially non-communicative in the dark days. I am guessing the stress related to the items in the lawsuit was getting to him. He was paranoic at the time - no wonder. From experience they will offer market theses but not specific company theses. If you ask Prem to explain why they bought SFK for example you will get told a stock line such as " we like the management" or we invest according the the principles of BG. They will give alot of detail about the insurance companies. The manager of Polish Re was circulating a couple of years ago looking for people to talk to. Sam, Brian, and a few others also circulate as best they can. Sam is pretty chatty and will lay out specific theses for equities such as LVLT or SD. As for availibility at the meeting it seems to vary. During the dark days you could easily talk to anyone for as long as you wanted. The last couple of years have been hectic. I am guessing this year will be more muted. Is it worth the trip... probably not. I have never been to BRK and wont go now. Not my style. I live 30 minutes from Downtown TO so FFH is no big deal.

ok22, Fair criticism for sure. Nothing wrong with that. Some thoughts: 1) NYSE delisting should have no effect on stock price except reducing volatility. 2) No argument 3) Ask some questions yourself. 4) RE: hedging - time will tell. I think we have to work back through the timing of events. They hedged much of this at a time when things were looking much more tenuous. I for one am not sure that it is about hedging anyway. They used the same excuse for the "investment" in CDs which at one point had put them close to $300 M in the red with counter party money posted. It is easier to say 'hedge' then "we are speculating with a small sum of our portfolio on a medium probability event that will make a great deal if it comes true". 5) All of the investments you mentioned were made prior to the meltdown. Some are now bearing fruit in a big way such as ABH, and Dell. LVLT, ABH etc. all add to the Quarterly dividends. To my recollection they have made some awesome high bar investments as well such as CWB, H&R Reit, ICG, SD, RIM, etc. JNJ is a depressing stock to say the least. It may languish for years. A stalled large cap is an unpleasant experience to say the least. Just ask shareholders of FFH itself. 6) Not a chance. Go the the annual meeting and take the time to talk to these people. After the near death experience in the mid 2000s there is not a swelled head in the bunch. 7) Underwriting for FFH is a source of cash to be used in investing. If FFH can get by not losing too much on underwriting things will be fine. I would not buy FFH at these prices but then I still hold a sizable position. At the moment I am nearly tapped out for ideas anyway. If it gets cheaper then I will likely start to reconsider. I just had to sell over a thousand shares after converting my options.

If you get the chance to go to the Fairfax shareholders dinner, talk to the quiet guy named Brian who runs the bond portfolio -- guaranteed to be worth your time. FFH has made far more money off bonds than equities in its lifetime, but people mostly like to talk about equities here. Well said Omagh, There is more in the bond portfolio stucture than meets the eye in terms of dual durations etc. FFH are among the best bond investors on the planet. As long as Brian doesn't retire or is unable to pass along that store of knowledge.... I think part of the key is to try and ignore the mark to market noise and focus on D&I income of 767 M, up 7% y/y. This number is growing Q by Q. As far as the hedging goes they will look pretty bright on a market pull back. We have been on the longest roll I can recall since the late 90s. I for one have been selling across the board nearly every day for a month now. You can bet that FFH is adding to that downside "insurance" as the markets reach new highs. As for underwriting I think we might as well forget about it. That is not really what FFH is about.

Fairfax was the Debtor in Possession for the bankruptcy. Chou participated via Fairfax's restructuring. Its not a value play now. Markel are friendly with FFH. I dont know about the rest. Probably watched the proceedings and asked to participate in the recap. with FFH.

I am not in the business of giving advice but fbk is not FFH or BRK or something else I want alot of my net worth in, no matter what the price. I keep companies like fbk out of my Registered Accounts where a non-tax deductible loss is catastrophic. My holding in FBK is about 10% right now. If it goes up to 4.50 my whole portfolio will make a 20% gain. If it goes to zero my whole portfolio is down 10% - not really that much because I have about 9 years of continuous capital gains tax to retreive. Trying to keep a position in a stock like fbk right sized is tricky. Hence why my churn is so high. I still hold a position in CFX - I dont really expect it to go up much from here but it still pays a hefty dividend and has no debt.

I was happy when it finally passed $1.42, which is my ACB across all my accounts, bought some way too early at too high a price, which made averaging down hard. I obviously don't have as much on this horse as some of you, makes up a little more than 15% of my port. Has any one ever figured and posted what FFHs' ACB is on this. I originally held this in late 2005/early 2006. I think FFh was in before me... I didn't know until later that they had been buying. My guess is that the original block of shares cost about 5.50. So, add 5.50 +1 (rights) /2 = 3.25 for their ACB. I dont see them letting it go for less than $5.00.

I am not sure how or when, or even if its legal in the US, but I would say that Wells Fargo looks like a good target. If he sits for 3 years he should be able to pull it off without huge dilution.

FFHWatcher, you are by no means alone in the 'manic' behaviour. I originally bought this stock in summer 2009 this time around. That should leave my ACB in the range of < 0.50. Well, I have bought and sold pieces of this position so many times that my ACB is now just shy of a dollar. Not very tax efficient but the alternative may have been losing all my gains. Each time I saw a show of strength in the pulp price, or the company, with no stock reaction, I would buy back in and then start to sell again when I decided I had overdone it. I agree it is only human with a large position. Smaller positions I can usually leave alone for years.

So, how much ABH and Rimm is not reported on the 13F? NB must hold some as well that is not listed.

You have a point Ben. Probably very little external money left. From Niall Ferguson: If Buffett has used the 2 and 20 formula he would have kept 57 million of the 62 million of profits he made in the first 42 years of his career as an independent money manager. This is what LTCM did as well.

Canfor Pulp results: http://www.canforpulp.com/_resources/news/2011/N110208_Q4_Results.pdf

Peanut Butter.... I heard it works with former SAC employees. Now imagine that you worked closely with one of these broken guys at SAC. Your whole networth is tied up with SAC, and its about to implode along with your career and your reputation. That would really suck especially if you didn't do anything wrong. I can go further with the rodent scenario: Soon they will be like rats trying to get off a sinking ship...