Uccmal

I sort of had 4 to 4.50 in mind. Thought we might get there today...

Folks, Dont confuse cultures. You may find that what you consider to be aggressive marketing is normal in another culture.

So Dazel, Knowing what we know about the investors in FBK what is your estimate of the takeout price? I know my price but wont divulge so as not to anchor anyone. Suffice to say it is much higher than the present price. Al.

By the way, we've been having this dividend vs. stock buyback vs. keeping the cash discussion for years. The dividend wins. Partner, I have set up a macro to regurgitate this everytime someone starts up the debate again... ::)

I dont trust the insurance industry, no matter who is running it, to side-step super cats. The world is too varied and interconnected to know all the odds on everything. This is probably why larger insurers trade so cheap on a perrenial basis. Cheaper than usual right now but not without alot of risk. So, if you can stomach brutal corrections that come without warning thats great. I have about a 30% threshold for insurers.

Myth, I dont know how much help I can be as I am often in the same debate. I hold one owner manager stock of any significance - FFH. I have held it via options until now. That allowed me to have outsized returns while FFH stock price has done so little over the past 14 years. Now I am going to slowly whittle it down to 30% of my total portfolio as a common stock. It is a great holding in Retirement accounts where I cannot take tax losses. I also dont like being so beholden to the insurance industry. One dirty bomb, or major west coast earthquake, and its all over. The rest of my stocks were value plays when I bought them. I have since been selling some such as PWF, HD, KO, and buying a few others. I guess my biggest issue is I think this may be a fools rally and would like more cash. How do you know? I could make a case for the S&P 500 to go to new highs as easily as drop 30%. Value stocks normally will protect us from stock market crashes. That is the point of the margin of safety. It worked from the 1930s until 2008, and then value managers got crushed like so many bugs. No easy answers. If there were alot more investors would get the outsized returns that we do.

Me neither... Inflation has been more or less continous since the second world war. I find the reconcilation between inflation and the gold price to be very poor. Inflation in the early 90s was running in and around 5% and the gold price was... dropping. The price of gold ran up quickly after the peg was removed until its 20th century peak in 1982, and then it retrenched and stayed there for 20 years while the CPI doubled. I'll know the bubble has peaked when my mother buys another ounce of gold - she last bought it at 800 and sold it at 400.

I have problems with gold and John Embry. John Embry has been a gold bug and talking up gold the entire time I have been investing - 15 years. He finally gets to be right. Lets hope he has the where-with-all to bail before its all over. Problems with Gold itself: - as an inflation hedge it is weak at best. - you cant define a value for it. I can put a rough value on my stocks. So, how do you know when its undervalued, fairly valued, or overvalued. - the US dollar is going up, not down, relative to other currencies, excepting the commodity currencies where it is more or less stable. - every time there is a mini-panic there is a run to US treasuries. I personally think gold has a way to run in this 'bubble' because that is what bubbles do, but I wouldn't touch it with a barge pole.

Any reasonable tax software should include these calculations. The main problem is not the 15% but the treatment of dividends as income which is at a higher tax rate than capital gains, or Canadian dividends.

I just read a chapter of the book "The Warren Buffett's Next Door". The second or third story in has a profile of a fellow who has sold put options and used covered calls extensively. Sounds like he does very well. I will be reading the rest of the book over the next couple of weeks at Chapters. A couple of board members hereon have alot of experience at these strategies - Ericopoly for one.

Uccmal: I have been using LEAPs too, the most recent one being VOD Jan2012 20 calls that I bought earlier this year which has turned out quite well so far. How do you select a strike price? For VOD I chose a slightly OTM strike (at the time) because the premium was so small. It seems to always be a trade-off between leverage, premium cost, and downside protection. Hi Gokou, Pretty similar. Around the strike price either way - more likely 0-20% above. No speculating on large price rises. I want the margin of safety in the stock itself. No fancy formulas. I am using the Leaps as a leveraged way to buy comon stock. Your Vodafone example is exactly what I would do. You have chosen a stock where you will get more bang for your investment dollar on your thesis which is pretty much what I do. Right now I only have GE options left but have used the strategy on around 15-20 different companies or SPYs, mostly to success.

Hi Oldschool, I am with Packer on this topic. I have read about various strategies, but stick pretty much these days to buying call options - nearly always Leaps on stocks I may buy anyways. It is a leveraged way to buy value stocks. Recently, I sold my GE Jan. 2012s and bought GE Jan 2013s. I exercised all of my FFH jan 2011 options last week. I have done extremely well with this strategy but it has taken some refinement, mostly through trial and error. I have tried writing puts which was an expensive lesson. There are easier ways to earn income, IMO. Writing puts eats up an enormouse amount of capital in your account to cover the collateral. On occassion I will buy put options on the index - the last time of any significance was in the summer of 2008. I made a little off of these but sold way too early. It is far easier to invest for the up side than downside. I stay with options that are very liquid. The GE option tranches trade in the hundreds or thousands of contracts per day. Same with options on most megacaps.

What you are getting if you buy Amex at this price is GARP. It's neither a bargain nor overpriced. That's okay if that is what you want. I bought it in fall 2008 and winter 2009 and sold it out later in the spring and summer. My last sale was around $35.

I think that Walter Schloss and his so Edmund had a CAGR return of nearly 21% over about 45 years. The returns of 16% were for the partners after fees...

Every once and a while I look at Dell again but cant bring myself to hold the stock. Indirectly I hold a couple of thousand shares through FFH so that is probably enough for now. I expect the efforts that Dell are making into the service industry will start to pay off much as they have for IBM and others who have gone this route. At some point the price that FFH paid for the stock will probably look cheap. In the mean time the margin of safety is in the free cash flow.

I think right now that this stock is stuck due to tax loss selling. Those who bought while it was going up rapidly in the spring are trying to capture a year end loss. My theory at least. finetrader, I dont think you can hedge out the risk on this with TSX puts. The two entities are uncorrelated. The best way to hedge the risk is to hold it in a taxable account and take your losses if it comes to that. They certainly should have enough cash to buy in the dBs. Hoping for a better 2011, always hoping.......

Hi Eric, Not only that but my broker just reduced the margin loan on SSW from 50% to 0% two days ago for some strange reason. This is not a major issue as I am not borrowing much anymore relative to my portfolio size. A minor hassle since I need to convert a large number of FFH options in the next few days, and want to hold onto as much FFH common as I can. Has your broker changed the margin requirements on Seaspan? I cant figure where this is coming from since unless there is a debt/equity requirement but why would it be triggered so suddenly. I am going to send a note and ask them to review this.

The ratings are also the guide that Pension and many bond funds use as criteria, like it or not. So far FFH has no trouble selling debt but if they want to issue 2 Billion as per their shelf prospectus they may have problems. When a hard market hits that may be exactly what they need to do to ramp business up in a safe manner, just when others are being downgraded.

Shalab, have you backed out the Zenith Acquisition? Also, the premium increase from other less visible acquisitions? Just wonderin... RE: The dividend - 20% increase would be a reasonable estimate. $12. It should be spread out through the year. tombgrt, that sucks to be sure but the dividend is now making up a signficant piece of annual book value growth. Maybe the stock is cheaper after the ex-dividend date.

Wikipedia has a good writeup on Francis. 1981 - Started investment club at Bell based on Ben Graham investing 1984 - got a job as a retail analyst at Gardiner Watson where he met Prem. Turned Prem onto value investing. 1985 - Prem and partners bought Markel holdings - Francis was an original investor. 1986 - Francis came on staff and continued running his club turned mutual fund Bargainman, Many of the best value investors have non-financial, eclectic backgrounds. Prem and Francis both recognize this. As per Francis' fees he adjusts his fees downward when perfomance is poor. A. - not an investor - just a groupie.

Crazy that the price is still so low, or crazy that some computer glitched on a trading program?

SD, that had occurred to me when I read the interview with the new CEO. He was also quoted as saying that he may be interested in acquisitions outside of newsprint and newsprint p&p. FBKs higher grade fills that requirment 100%. I think we can be pretty sure that FFH will want a minimum of $5.00 for their stake. Lets hope for a bidding war on FBK...

I think so. I am thinking that they will get a good portion of ABH equity.

that's rich... or 20 million in fbk stock and 1m cash. This is a very philosophical question along the lines of What is the Meaning of Life or Why do we work? I am at the stage where I dont particularly need to work for money any longer, probably, so I want to work for something that is meaningful to me. I have taken an extended parental leave that will be ending soon and I am having trouble imagining returning to my old job. I may go back long enough to pay a few bills collect my vacation and go on to something else. Last week at a dinner party I was talking to a fellow who retired from his job will a full pension a few years ago, who was already a millionaire back then. He now works 50 hour weeks running a seniors center, for a decent paycheck, and loves every minute of it. Before he left his job he spent the last few years doing secondements all over the place to find what he would like to do "when he grew up".

http://www.bloomberg.com/news/2010-12-09/abitibibowater-new-shares-to-begin-trading-tomorrow-toronto-exchange-says.html My guess is that this may be FFHs largest equity position going forward. I glanced through the prospectus but cannot determine FFHs total ownership. Paul Rivett is on the BOD.