Uccmal

Dont waste your time Eddie. http://cornerofberkshireandfairfax.ca/forum/index.php?topic=1678.30

Basically I’m not going to waste my modest research resources situations, where just cash flow statement will tell, that investors are not going to get reasonable return for their invested capital. Cash is not precious for them. There is no Eddie Lampert calling the shots. Value^2, I give up. If you feel you can comment on a stock when you haven't researched it, let alone read the entire thread which goes back months, feel free. It isn't me who is looking like the patsy here.

Value^2, You still have not done your research I see. If you had you would have discovered that there was a certain order to operations. You would also have learned that the major shareholders, and controllers of the company, the Washington's were the major buyers of the share issue. Hardly a Ponzi scheme if they are financing my dividends with their money! You would also realize that this company has chosen to domicile in the US where accounting is much more stringent rather than in Asia where most of their business lies, and accounting is much looser. Come back when you have something to offer in the way of valuable criticism.

Thanks for the links <IV. VAlue^2..Well, I guess I am glad I am not relying on you for investment advice..Next time please do some research before commenting.

Carl, your like a one man band... You must not be one of the long term share owners with a $600 pps cost basis on portions or more of their shares during the decade, and FFH's rough patch. Very few shareholders bought at that level. The stock was lightly traded then and only at those heights a few days. Prem even suggested at the 1997 or 98 AGM that the price was on the high side and likely to drop. Probably no one who still holds the shares and likely no one on this board paid that much. I bought about 15 shares at 385 cdn before it started tanking in 1998. The rough patch has little to do with FFH's investing skill and more to do with their hubris when they bought TIG and C&F. Prem has stated publicly that they aim for 3 out of 5 success rate in their investments. I am not exactly sure what this means, but their equity investing record is in the AR and is about 20% per year averaged over the entire time of the company. This mixed with their incredible bets in the bond markets and CD markets gives them a total return over 24 years of about 20%. There are likely only a handful of investors who could beat them. As for LVLT I have seen it all with Fairfax and try to keep an open mind. They obviously know the company and the business. These folks are not rubes and have plenty of bench depth in virtually any investing arena. For the above reasons I generally dont coattail FFH. If you dont do all of what they do you wont have the same odds of success. Like Buffett it is better to just own the stock and see what the masters do. But, it makes most sense to buy the stock cheap in all cases.

Hi Packer, Going into the Fall of 2008 I was holding puts on the SPY tracking stock. I sold most of them out at a profit in the 1150-1250 S&P range. Obviously, I missed the biggest gains and the best effects of the hedging. However, I would have done the same thing again since I cannot answer the "when to sell problem". In the end the biggest gains I got last year came from selling stuff daily on the way down in February, and buying other unrelated stock as the same time. By doing this I have captured a tax loss and all my gains into the rest of the year are protected by the huge losses I took. I am up substantially on the year using January 1st to today. Right now I hold a small amount of the same SPY puts as partial insurance, which I bought in the last month. This is to shield me from having to take any taxable gains before the New Year. Unless markets drop dramatically I will let these lapse and take the loss. That is a true hedge. Otherwise I tend to agree with Sharper. It becomes a balancing act of opportunity costs. When in doubt 'keep it simple' probably applies which means holding cash until more compelling opportunities arise.

I am still holding RBS.pr.p since April/May last year - Royal Bank of Scotland - $25.00 preferreds. A small holding due to obvious risks. On the other hand I cant see RBS or anyone else stopping payment permanently on their preferreds. That would be a death knell when they are trying to raise money via equity and other preferred placements.

BRK was a poor example. My point was more of where you measure your decade from rather than Brks own performance. If you start at a different point a couple of years removed, using the S&P, you get very different results for your decade.

Subject to timing bias. Ten years ago we were at the absolute peak of the all time greatest rally. If you had invested in 97 or 02/03 things would have looked much better, or March 09 for that matter. The only thing these statistics tell us is that you would have had a lousy decade if you invested in a general ETF in January 2000. If you had bought BRK you would be up more than 3 times.

It is very easy to look at this with hindsight isn't it? I still think Abitibi is going to work out and Fairfax is going to come out a majority owner in one of the largest p&P/timber companies in the world and it will be profitable. It's value in the end is anybody's guess. Similarly I think the Brick will work out, and Megablocks. Canwest appears to be a mistake, through and through. With Torstar they will be lucky to get out break even. It is interesting to note that the crappier investments were made pre-crash. Obviously FFH was moving down the quality ladder at the time. Most of the investments made during and since the crash are higher quality. This speaks to the experience of Warren versus the Fairfax team - Warren was able to wait knowing his time will eventually come. You can bet that FFH will be better at waiting going forward.

I too have thought long about Tim Hortons. In reference to Stubble's numbers: 1) Domestic: TH has some absurd precentage of the total fast food sales in Canada. 43% of quick serve, and 75% of coffee and baked goods (from their website). Where do you go from all. The funny thing is I frequently see new ones open up in newly constructed regions north of Toronto and they are full instantly. 2) US expansion - This is going to take time. They are spreading like an invasive species down the interstates at the rest stops. I think the northern states and the "Canadian" states such as Florida may embrace these expansions over a few years. Also, you cant get past the ability of this company to market. They have an outlet in Khandahar, Afgan. There was a drive to send all the Canadian troops a $10 TH gift card for Christmas this year. People donated online and every single Canadian serviceperson has received a card. Now there are thousands of Americans and foreign troops in Afgan who will also frequent this outlet, and may get a coffee bought for them by their Canadian counterpart. Not to mention the effect of having an outlet in Fort Knox in the US. 3) You can gaurantee that if the breakfast sandwiches slow down the service they will take them away. Or they will find a faster way to deliver. They will be looking at the numbers. I am not an owner of THI. I have a target somewhere in the mid-high twenties. The only time it got there was when everything else was 70% off so I was buying elsewhere.

Hi James, Have you looked into this. It looks to me that the options are trading off the Pinks now. I would think anyone could sell options against the frffh.pk symbol.

oec, My thinking is only that PWF is 50% cheaper than it should trade at, mostly on a normalised earnings basis. It is a very tightly run operation and most of the recent problems were due to reduced AUMs in the assorted Mutual Fund operations. Prior to the downturn Power consistently traded at PE 12-14. I was not comparing it to MFC directly. I just happen to know PWF better than MFC and have more confidence in its management particularly since the crash. If you hadn't guessed I have been buying up dividend paying stocks with long histories of raising their dividends. Now I realize that MFC is not in that category but at some point they will likely be in a position to play catch-up. My general thinking is that from here for a number of years the only gains one sees may be from dividends. So as I see these various operations come on sale I am willing to buy bits and bites of their stocks.

As per the thread I am loaded up on FFH, but certainly not Manulife (1/15th) the relative size.

I have bought a small common stock position in MFC about a month ago. I would buy more but I am dry of powder. I will be the first to admit that I have only skimmed any financial reports on the company. However, 1) I have dealt with the company in various capacities for decades 2) Management is sound 3) I have eyes wide open when it comes to their stock based products they are selling that have caused them such grief. 4) They are raising cash and saving money 5) They have a strong Asian presence. 6) A good chunk of their business is a nearly insurmountable moat - government pension funds, unions. 7) Trading at book. I also have a bigger position in Power Financial which is at least 50% cheap (I know it better than MFC). And I recently took a position in Sun Life - also trading at book. I would put them all in Buffett's category of a fine businesses going through a time of trouble.

I am completely unsure of which way things are going. So I have hedged my holdings to about 40% on a linear basis. I have used at the money SPY puts (109s, 110s, 111,s). At the same time I have alot more money in holdings that are paying dividends that are (unlikely?) to be cut. That could add some stability both in Canada and the US holdings. Companies such as BCE, PWF, JNJ, KFT, RUS, and leaps on other Blue Chips - FFH, GE, HD. I have never been able to wrap my head around holding cash except at what I can say for near certainty are market high extremes. In my estimation we haven't had one of those since 2000. Taking last fall or winter for example should I have held cash until the following S&P levels: 1) 900 - wouldn't have worked 2) 800 - wouldn't have worked 3) 700 - may have worked - subject to hindsight bias 4) 600 - would have missed the entire upside 5) 500 - same thing. My point here is that none of us could have known when to go all in. It looks easy in hindsight. In my opinion you buy when you can indentify some margin of safety and sell when things get to rich on Individual Issues. Hedging allows you to hold individual issues through a trough without having to sell (taking gains) and without losing your upside. Should there be losses on your puts they can be put against capital gains. Point to SD - paying down the mortgage is not a bad idea at all when you are having trouble finding values and are uninvesting in stocks.

I became interested when FFH bought their shares. Kraft has one of those balance sheets that cannot be valued other than as a going concern. Book Value after stripping out Goodwill is negative. So, It pays 4.4% dividend which is 1% higher than a ten year bond. The dividend looks secure. And who in the heck has not used their products this year? If they get their EPS growth target it looks even cheaper. I would say it is good for a 40% gain in the near term. The Cadbury deal is definitely a hangover at the moment. When it looked like the deal had blown up a couple of weeks ago the stock started to rise. But Mrs. Rosenfeld seems to be well schooled in the Buffett way as best I can tell. I bought some common in the past couple of months with the intention of keeping them forever in the income earning part of my holdings. The dividend pays more than the margin interest rates at the moment.

How did this become a Tiger Woods thread? Sorry Smazz, That would be my doing.... Early on I was questioning why anyone would want to live in Canada since we dont have Tiger Woods... :P I actually think the women he is alleged to be associated with are fairly hot, considering none of them are airbrushed for photos or anything. More than a couple of them kind of resemble his wife. A.

RR, Great Article...

Yeah but Darth turned good at the end... uhmm....after killing uncounted billions of people and other funny looking sentient beings.

Just a thought for you Eric. I have been buying June at the money puts. My rationale goes like this: 1) They are alot cheaper than the Leaps 2) If markets go up significantly from here the ones I hold will become worthless but I can lengthen the time out and buy a higher value put. Of course I will have to reload by June but my thinking is that I will have sold them all at a profit long before that. I am re-reading Security Analysis and on the first pages there is a graph showing the assorted indexes of the day and the industrial production. There is a very clear lead on the indexes ahead of industrial production. Since production has picked up and employment is picking up, but not vigourously, I am figuring we are in for a market correction before any further leg up. I would rather not sell the carefully built up holdings I have, but would rather pay for the hedges in the off chance they will pay me back. Its alot to explain on the board.

Thanks man.

I think there is a long term upper limit which is probably about 23-24%. I dont expect anyone could statistically beat that indefinitely. There is an element of luck, timing, birth timing, market timing in all of this that will get everyone in the end. Since no individual business will grow at 24% indefinetly you have to trade and take gains eventually so there's the taxes. And competition. Even if you get rid of a portion of your capital and keep it small you will still get caught by a number of those factors. And no one on earth no matter what they do will bat 100% continuously, human nature being what it is. Eventually hubris will take over and you'll Bill Miller for a couple of years and bring things back to Earth. To equal Buffett over a similar time frame is no doubt possible, but to beat him - not likely. There are many things where upper limits exist that cannot be broken such as car speed, boat speed, or jet speed. The same type of factors play each time and basically amount to some type of systemic friction. Investing has a systemic friction over the very long term of about 24% - prove me wrong!

Knowing that hindsight is 20/20 I keep mulling over what I would have done differently. I took a major hit in the second phase of the crash in March. Most of the damage done was due to a single stock - FFH - falling $100 in a matter of days after the report of record 4th Q earnings. This forced me to sell all sorts of other positions at losses. However, I dove right in and bought higher up the quality curve. This year will be tax neutral and portfolio positive as a result. I still hold roughly the same amount of FFh with the same relative durations of Leaps as I did last Feb. I cant say then that I learned a whole lot except to make sure I manage my margin debt through hedging or minimizing the debt. What we had was probably a once in a lifetime event. So, I dont want to get anchored to those low prices, otherwise I will probably never buy another stock. This is what happened to so many after the Great Depression and caused them to miss the super rally during the 50s and 60s. I am learning to sit tight until stocks are delivered to me, much like Buffett tends to do. For at least a year leading up to the crash I was moving lower and lower down the quality curve. It simply isn't necessary.

100 k to 100 m in 12 years How about Sergey Brin/Larry Page Jim Balsillie/Mike L Bill Gates Not exactly investors though. Inve(n)tors. Big difference. Since I dont believe most of what I read would you share your Mentor's name so I can check this out and invest with him/her as well.