Uccmal

How about this: "Alberta government considers building a Nuclear Reactor to extract oil from oil sands"

Hi Mungerville, Paying all cash for a house makes no sense to me, unless one doesn't have a steady job. My variable interest rates are 2.85%, and I can lock in anytime. Given the option, were I your brother, I would give you a chunk of my cash to invest, invest the rest in bonds, and finance the house to the 80% level (20% down) to avoid CMHC fees. A house is a truly crappy investment as investments go. The only reason you would buy a house for investment purposes is to take advantage of the leverage to buy more real estate. If your living there then that's a different matter. Just buy the damn house. Pay the 20% and invest the rest at rates that are likely to be better than 3% annual return. Alternatively, buy the house outright and take out a line of credit against the house for investment purposes. Then at least its tax deductible - mind you the line of credit will not be a 3% loan and after the tax refund it will still be more expensive than the 3%. I have worked through various scenarios and actually have decided to minimize the mortgage payments and invest the cash difference into my Wife's brokerage accounts. Should we get an inflationary environment the best asset to hold is fixed debt. This is what makes BAM so compelling as an inflation hedge. RE: Inflation - Watsa et al dont feel inflation is any kind of a threat at the moment. Inflation is driven buy consumer demand, and ultimately by demand for money. If the US savings rate, and probably savings rates elsewhere keep staying high the demand for money is going to be low. Supply will > demand.

I was checking my log book. There were no FFH 2011 Leaps available until late last year, possibly early this year (2009). I was still buying 2010 Leaps in November.

Welcome back :)

Your talking a specific niche of insurance which is gulf energy production. FFH, via Lombard (I think could have been Federated), got slaughtered in this business, and exited it 100% after KRW. Now I dont know specifically about ORH. I would think they will keep their exposure to this area low, no matter the price. The primary reason FFH writes insurance at all is for the float. Since they have loads of investment money I would think they will stay very selective. On the other topic: Part of the NOAA's mandate is to do medium term forecasting, despite the inherent lack of precision and accuracy with this art. They are probably substantially better at forecasting hurricane seasons than economists or investors are at forecasting markets. Remember that they are forecasting that the occurrence of storms will be about average for this point in cycle. This is completely unrelated to where these storms may hit, or how much damage they can cause. A tropical storm hitting the Fla panhandle, can do vastly more damage than a Category 3 hitting Houston.

Last year I was looking for Jan 2011 leaps for several different stocks and nothing came out until late in the fall at all - kind of grateful - it saved me alot of losses in the meltdown The poster fomerly known as uccmal

Either way, it looks pretty cheap to me considering it is at 85% of BV or less.

Around December.....

This is beyond the absurd. I cant even imagine what these guys - ICP - hope to get out of this other than more legal fees. The IRS closed the files on the years of concern, after a restatement, and extensive review. It strikes me as about a one in a thousand chance that the IRS has any intention of opening such a case back up given the hundreds to bigger fish they have to fry at the moment. As for a short campaign, I cant imagine that anyone would try to take out Fairfax at this point when they can attack about 500 other stock exchange listed companies on a daily basis. This comes right out of Cale Darnegie's "How to lose money and alienate people".

Seems Buffett recognized early in his career that people will work for recognition or positive feedback as their primary reward. I suspect you are no different than anyone else. I think there is a difference between ego and positive recogntion. Ego drives you to claim more than your fair share of credit, be it financial or otherwise - Bob Nardelli would be a bad case in point. In your case I would say it is not your ego operating.... it doesn't hurt having met you, and reading your posts for 4 years either. Finally for your own peace of mind "How important is it?"

but if somebody wanted to pay me 2.5 times book for Fairfax, I would sell in a heartbeat. Unfortunately no one has offered me this amount since 1998. A.

smazz, yes, I am transferring the cash between accounts so I am getting dinged on the transaction. However, moved cash to the US account in a big way around parity; then moved it back to the Cdn account last fall early winter - this left me with margin debt in my US account and a huge cash asset in my C - account; Now I am starting to equalize them by moving cash back to my US account. I figure I have made at least 20% on the money I have round tripped after fees. It was not really even intentional at first.

Hi swf, If you want to own FFH shares 250, 258, or 265 US is a real good price. For that matter $300 is still insanely cheap for a company that will have an ROE of >20% over the next 5 years. In the medium term the $8.00-$15.00 or 3.2%-5% difference from your price target is going to make no difference. In my opinion it is running at a very minimum at least 150 US below where it would be trading in a healthier investment environment. In a frothy market this company could easily be at 750 US. It could go way lower than 250 as well, but it may not ever reach 250, in which case a randomly selected number will keep you out of an exceptional deal. Of course if you're like me where you hold a huge amount of this one company then you may want to pick and choose.

There are too many factors to make even a reasonable guesstimate of what would happen in Canada. Rising oil rices for a sustained period will eventually bring in to production more natural gas, offsetting the oil effect. The US has lots of gas, as does Canada. If oil prices rise too high then a recession ensues. This has the effect of pushing down the Canadian dollar or raising the US dollar, however you look at it. During times of low Cdn dollar vs US I move all my cash into my CDN account (effectively buying Cdn $). This creates a large margin debt in my US account and a large cash position in my Cdn account. A couple of weeks ago I started moving some of the money the other way. Should we reach parity again I will completely reverse the position and hold my debt in the Cnd account and my cash in the US account. At some point it will reverse again and I will adjust it backward. I have been into hundreds of manufacturing plants in Ontario. Without fail they buy their equipment from the US (mostly) or Germany. Many (not all) of these companies are suffering badly now. Those that will survive have preserved their cash and are taking the time to upgrade their worker training, their equipment, and their productivity. I have seen it first hand. The higher Cdn dollar helps them to do this. The losers are the same as those everywhere. They will die out. You are going to have a hard time convincing me that RIM, Magna, Linamar, Bombardier, are not going to do well going forward. Magna employs directly, and through its supply chain probably 75000 people in Ontario. Not to say I a would buy the stock of BBD but the company will be fine. They are still selling Q400s like hotcakes.

yep, back and forth, forth and back.... I bought US dollars at 1 cdn, Canadian dollars at 0.82-0.77, and am now reversing the position. Has to be my most lucrative trade in the last year.

I would tell them "you beat me up over a $500 raise; learn how to save and invest and in 15 years your investments will earn you more than your salary". I know I made people more aware... not sure that many took my message to heart. That's priceless Viking and true.

Parsad, You told my story. I started with Lowenstein, and he talks about Warren reading the Intelligent Investor. I had to order a copy, about 12 years ago. Struggled with it the first time but I could grasp the key chapters Buffett mentions in the intro. Did a zillion hours of other reading, went back and tried again. It was much easier going. Have since read much of Security Analysis (the bond and fixed portion was a bit dry so I leapt part and read the equities portion). Your comments on the hundreds and hundreds of people with whom you have discussed investing, and the few who have actually read the book is interesting, and rather telling. Mandeep, I will inject my person opinion here on the present state of megacap investing. I am in no way claiming to be able to correctly value AXP, GE, or WFC. That does not mean I cannot extrapolate that they were (WFC)/are (GE) dead cheap, or cheaper than dead. An extimate of normalized earnings conservatively applied, and a low PE will show you that any one of the above and others are insanely cheap by any standards. Could they get cheaper, of course... but so could anything else I have a better handle on. Part of Ben Graham's margin of safety was some diversifcation. Buffett didn't do this but I am not Buffett. FFH does it as do most value investing fund managers. The other advantage of the megacaps is that it is difficult to get stuck in a crappy position, unlike some other well analyzed microcaps I have held in the past. The alternative is to buy the shares of known value investors FFH, Markel, BRK, LUK, BAM.a when they are very cheap. Al.

There is not alot of overlap between NB and KFS except maybe some with Markel. KFS does non-standard non-commercial vehicle, for the most part, whereas NB does mostly commercial P&C. KFS specializes in auto facility in Canada, high risk auto in the US, long haul trucking in the US, and motorcycles. I have never been able to figure out why they cant get the underwriting fixed in this operation since it is mostly short tail. It's not as if they are only a little bit wrong either. As Stubble says, I think they will take at least a couple of years to clean up the past bad underwriting. They have no special investment capability to overcome the bad underwriting. They do alot of their business through MGAs. Everything FFH has learned to avoid KFS practices. P&C is a crappy business as Buffett has shown over and over. The only thing that makes it work is great investment management, and the ability to pull away when rates are crappy. Kingsway has had neither. Changing a culture will be very difficult especially during a proxy fight for control. I have owned and made a little money from this in the past. I sold my last shares in the low 20s at least a year ago. By the third announcement of bad reserving from Lincoln General I had had enough of the promise never delivered.

FFH is in the commercial business so aside from the California Comp. business would they have any exposure at all? I am asking, not telling.

One thing that seems evident today is that this is very much a Canadian story. 2 hours open in NY and only 8000 shares traded. Canadians must be the bulk of the buyers and sellers even in NY - purely anecdotal based on today being a holiday here.

Alert, I suspect they are keeping holding company cash at levels as high as possible right now. By my estimate there is no reason the equity portfolio shouldn't return 100% over a relatively short period of time, depending on purchase prices which I was not apprised of (say 6 months to 2 years).

Dear Mr. Buffett (Tavakoli) Brutally Bad... Horrible, Terrrible; Awful writer using Buffett's name to write a book. I guess that would be a bad review.....

It's partly FFH's style. They buy very low and sell low. I recall Russel Metals (RUS). They bought in the low snlge digits and sold around 8-9 a share after a tripling. I bought around 8-9 and learned later that FFH had owned Russel. I sold most in the 20s and still hold a tiny bit. When I bought Russel was at PE=6; and P/Yld = 6% When I bought Sino (no connection to FFH- credit dfCannuck) I paid 3-4 x earnings and sold at about 9 x earnings roughly for a triple. FFH right now is at a PE of 6 and a P/B of 0.85. If it follows Russel and Sino up it should at least double in the next few months, perhaps even triple.

I am betting they have unloaded a portion of WFC, or possibly all, since the latest filing. Unlike Buffett FFH can unload their holding in a day or two without dropping the price. There is absolutely no reason for FFH to sit on those gains. We may be very surprised at Q end when we are told that there are a few hundred million in realized gains.

Norm, You certainly know Magna as well as I do. Conservatively, when autoparts recovers I would suggest it could be worth 120/share fairly easily. They are the most solvent of all the autoparts companies with enough cash behind them to buy up large pieces of the primary assemblers. This could get really interesting if GM or Chrysler sell off parts of their Canadian assembly operations.