Uccmal

Alertmiepp, I am not sure where your getting the idea that folks are selling this stock. The volume is rock bottom. When a stock trades barely more than I hold for days on end I get worried that I wont be able to get rid of it if I need to.

They better hurry this thing up while it still has any value at all!

Sharper, How do you hedge FFH shares? A.

Well, this is starting to get interesting. BP stock (in sterling) is closing on the levels reached during the financial meltdown. I have been starting to read up on the company. Not ready to take a position. I dont know enough about stopping oil leaks to determine the total liability here. It seems very possible at this point that oil could leak until the well just runs out of oil or self plugs. This, with a probable nasty hurricane season ahead could be enough to kill the company. We shall see.

As far as dilution is concerned, if they use the proceeds of the rights offering to retire debt already owing, is that really dilution? That is, if they sell $40 million in new shares and reduce debt by $40 million, is not the company then worth $40 million more? Clever idea asking the shareholders to chip in and pay out company debt with the reward of decreasing debt and interest expense in the hopes of increasing share value for all. That part is mostly as I see it. If you subscribe you will have bought an exact proportion of the company in relation to what you already hold and it will have the exact value that you paid for it - no matter the price of the subscription ultimately. It is right out of the FFH playbook. They used similar rights offerings with Lindsey Morden years ago, and agreed to buy up the excess if people chose not to subscribe. No matter what the price FBK gets their 40 Million-fees, and the book value of the company increases by 40 Million - fees. Subscribers end up holding exactly: FBK + 40 Million - fees. There is no dilution in an individual subscribers holding as per book value.

MFC is a life/health and wealth management company. As such it is not comparable to the others on your list. Right now it is trading according to the equity indices (S&P/TSX). Hence, why it is below book. With each 10% change in the indices they book roughly a 1 billion change in earnings (mark to market).

I hold Leaps at 220, 240, 260, 280. All are deep in the money but trading like stocks i.e. they no longer have time value at all. In fact the bid is often lower than the FRF bid for the common stock. Looking at FFH specifically: - They have 1 billion in cash on hand and dividend capacity at Zenith, and NB (out of the hurricanes way) - The severity of the hurricane season is unlikely to eliminate this cash hoard. - IF/When some major hurricanes hit some of the competitors are going to be forced to raise capital probably when it is least available to stay in business. Barring unforeseen combination of disasters FFH will not be in this situation. When hurricane season ends and we know prices are rising by 30, 40 and 50% across the world will FFHs stock not snap back and reach new highs - all before January 2011. If the hurricane season turns out to be a dud then the odds of a hard market are reduced and the status quo is maintained. I have considered selling a portion of my position but so far have relented. If I could replace the Leaps I would probably sell some and buy back on the dips but that is no longer an option. So, I will stick with them and do some sort of simple gains loss analysis - what do I lose on the upside when I sell, versus what do I lose on the downside if I dont.

Calonego, Well said... Thanks.

Biaggio, I honestly have no idea. It is just my opinion that if you are buying a company based on the commodity price rising, then that could turn out to be a less than lucrative proposition. Sandridge by some estimates needs at least the prevailing price of natural gas (c. $4.00), probably higher to break even. I can suggest as many reasons why oil & gas can go down in price, as reasons why it should go up: 1) Down: - Government intervention in the form of war (could have opposite effect as well), taxation, direct pressure (this is not the 1970s anymore, OPEC is far more fractured). - Greater fuel efficiency across the spectrum - greater use of coal - greater use of other alternatives - each adding a minor effect but in aggregate having a sign. effect. - switching to gas which we seem to have an abundance of on the continent - Vastly greater use of tar sands 2) Up - Opec - declining production (oil) - increasing demand - so far this is proving elusive but could be the product of a recession - Geopolitics 3) Price up but cash flow drops - drilling costs rising - less return/well - processing costs rise (Recall summer of 2007 or was in 2008) - refining shortages All of these are unknowable so unless you are dead sure that oil & gas wont go down in price then basing a purchasing decision on the extraction price right now or at some point in the future is a weak proposition.

I think what you guys are describing is a tipping point. Companies are releasing past reserves, buying back stock, and generally using their capital in a frivolous manner. Eventually, you reach a point where even a small or midsize event tosses everything to the dark side. Rather suddenly they cannot meet their capital needs, and things spiral out of control for the poor operators. While the weak operators are struggling to raise capital the strong ones take away business at a premium.

Yeah, that's it. The author is a bit of a strange character but he is a value investor. He has taught at the Value Investing school at Western that FFH endows.

I wonder if oil slicks slow down evaporation. Less water vapour and fewer storms. Maybe we found the cure to the common hurricane. I agree. I wont buy FFH before storm season. Its not relevant whether or not they will benefit from a hard market if they get hammered along the way. However, I am not selling either. So there you have it.

I was reading a fascinating, but brief article on the weekend where the author suggested that the Eurozone, and the US, will try to drive down the price of oil one way or another. The rationale for this is that they will save enough in a couple of years to pay for all of the stimulus packages, deficits, etc. 30-40/bbl oil will save the collective EU/US a couple of trillion over a couple of years. China would also benefit. At these prices I am staying clear of direct investments in O&G companies. The time to buy will be when Oil is at < $30 and Gas < $2.00. That being said I carry smallish positions in Mullen Group and Precision Drilling. These guys will get the cash either way if drilling on the continent picks up. When FFH structures deals with companies such as Sandridge they look out for FFH and FFH shareholders.

That is a kind invitation, but I'll decline. I've made my points, and I'm pleased to see most people get it. As for the rest well, I'll leave it to Warren: "If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is." Opihiman, What is this garbage. You openly criticize at least two board members and then dont actually add any value yourself. I too am confused by your comments. Obviously I dont get it. Damn shame.

To be correct: He gave a response to the collective concerns of those who wrote. It basically amounted to a great big "f___ you". The Guru has no interest in hearing from you. No mistake was made. Take it or leave it. Be happy you found out now and can choose to sell, hold, or in some cases buy. Take another 80 or so off the stock price and it will starting to look like good value assuming existing management is turfed before they can do too much damage.

I completely goofed that commentary up so I deleted it. Left my brain somewhere while I was writing it. Sorry..

Finetrader, I had a look at the MFC put you were discussing. It looks like you could get 0.90 cents/unit. So you would get $900/10 contracts. It looks relatively risk free at the moment. The problem I have with puts in this context is that they eat up an enormous amount of margin. If everything works according to Hoyle you will make $900 less fees. If the position moves against you, you will have to post more margin. That amount of margin starts to rise dramatically as the stock drops. If the price of MFC drops in the US from 15.50 down to 12.50 which is only another 25% you will have to post the entire value of the purchase price of the stock as margin. 12500. What I am getting at is that you need to have 12500 of available margin before you even consider this strategy. I have learned this from experience. During the 2008 meltdown I sold some put positions and had to post collateral on them. I hadn't lost that much money but what happened was that I had used up my margin availability writing the puts and got successive margin calls. At this point I had to call the broker and have them "loan" me the money to complete the transactions to free up the margin so that I could further reduce other positions. I was in a frozen state. I will re-interate that this was due to writing puts, not due to other losses suffered in my portfolio. So, unless I see a huge dislocation somewhere I am staying away from this strategy I am staying away from this tactic. I have had it work as well buy the returns are dwarfed by anything I can earn by buying stocks like MFC cheap, or using Leaps on some occasions. The thing I like about Calls and Leaps is that they are straight up purchases. You cant get use margin to buy Calls. So therefore, if the value of your call goes to zero it wont force you into a sell position. You can keep it to expiry and hope it recovers. Options are volatile and this happens alot. My final comment is that if you have to buy in the puts you will have to pay the full amount for the stock in all likelihood. Liquidity tends to dry up at these times.

Therein lies the problem. The very behaviour that gives me outsize returns can also subject me to high volatility. I think the key is to separate cash piles. One pile in conservative holdings that will feed you when things are bad, and one pile that is more subject to volatility. To that end I have been buying up dividend payers at discounted prices. My RRSPs barely budged in the last 4 weeks - actually up a little on FFH. My margin accounts have been all over the map. The next trick is to be able to actually sell things at a loss, and buy something else that is cheaper, and better.

Prem did mention 1062 somewhere. It would really surprise me if they hadn't added some more in late April. Or alternatively, sold down some positions. Good move on your Puts Sanj.

valuecfa, Wrong wording on my part. Anyway the greater point of my post was that its not a bad time to buy your favs because the goods news is being smothered by stale bad news. And the market is down 31% from its peak which any other time would define a full scale bear market.

When this topic comes up here then it must be capitulation time. It's funny to see companies across the US sitting on mountains of cash they didn't have 1.5 years ago. Is see a certain insurance company just increased by 25% in size today, officially. Yesterday Jeff Immelt was jawboning that GEs second quarter results were going to be a lot better than expected and they were sitting on loads of cash and looking for investments and talking share buybacks. Google, Apple, MSFT, Cisco, Dell, Intc, and others could collectively dividend out a few hundred billion in short order. This is one of those priceless buying opportunities - an official correction. 31% down from S&P all time highs. Small amounts of RUS, MFC, SLF, SSW, CFX.un, GE, PWF

Yeah, I definitely like that method better. I can think of two or three cross listed stocks already I hold that are good candidates such as SLF, and MFC. I hold them anyway for the long term. BCE as well. Thanks Smazz.

No formal opinion thus far. I'll let you know if I get audited. IMO, that paragraph you have quoted refers to the actual purchase of a foreign property such as a stock. Moving currency back and forth would fall under the guise of a future Tobin Tax. I am not even sure how you would report this type of transaction. Its very difficult to match things because each transaction deals with a different set of exchange rates etc. Taking this a bit further and noting the transaction costs of about 2%. Would these fees be considered broker fees (they are) and would they then become tax deductible like all broker fees - If that is the case declaring the transactions may actually work to my benefit on an after tax basis. Adding to all this confusion is that there is no T-statement from your broker with any of the relevant info on it so they are not reporting it either.

There are no currency transaction taxes. They have only ever been proposed.

Yes, the interest rates on my Cdn acct are about 2% lower. I take that into consideration and try to keep the bulk of the debt in Cdn currency. I try to run my US account with a tiny debt or with a slight surplus.