Uccmal

I dont know why people persist in thinking the business cycle is dead. Last time I looked things proceed in the following order: Stocks crash; bonds rally; jobs are lost; there is a recession Companies trim expenses; debt gets paid down - quicker than people think - cash flow starts to return; commodities rally; (we are here right now) stocks start to rally - bond yields are now too low (the rise in stocks to this point has been a reversion out of an oversold position) The economy picks up and you are in a new bull market. I dont think there is a chance in hell you will see WFC at 11 or GE at 8 again, in your lifetimes. That opportunity is past. Its back to good ole value investing now where you pick and choose undervalued situations. There are certainly still some real good opportunities but nothing like the deals in March.

Just curious...why own the LEAPS rather than the common stock? Simply because less capital is required for the LEAPS (compared to buying 100 shares of the stock for which 1 LEAP represents)? Yes, and for the leverage. The 260s are slightly out of the money. If FFh goes up $80 the leaps will rise from $47 for what I paid today to around 120. That is a nearly a 3 bagger. The common cost me 250 and will be worth 330 with an 80 increase, which is ~ 20%. The downside of course is if the stock stays at or below 260 until Jan. 2011, then I lose all my money. I have a strategy of selling Leaps into rallies starting with the highest strike price I own or the nearest expiry date. I was selling 260 - 2010s a couple of weeks ago. Mark, that is something.... I dont think I was bidding against you - I kept trying to draw the bid down as the stock was tanking. I had another offer in at 44 that didn't get filled.

I bought 100 shares of FFH-TSX today below $300 & 1 x 2011 Leap - 260. 250 US/ 300 BV = 83%BV;

Thanks Partner

It's might sound ironic for an investor to delegate the particular investment decisions to someone else To be fair, even FFH delegates investment decisions to others such as Chou, Housington, and in foreign locales.

Holding FFH simplifies crap that I don't have time to conduct thoughtful analysis like sizing muni's, corporate bonds, active investment portfolio, etc. and holding 90% FFH allows me to do everything that I want/can't in one single investment, it's efficient for me. I liked your post Shah. FFH is kind of like a no fee hedge fund isn't it.

Stubble, no reason in particular. I haven't done a tally but they have spent enormous amounts of money on investments. I am sure they could sell debt at 7.5-8.0% you suggest, whether it would be worth it is another matter.

That is pure speculation at this point. I am beginning to wonder where FFH is getting the money for all of these deals? I will be curious to see if we get a bond, preferred or other issue from FFH at some point.

I was buying stuff however I could in mid march. Lately I have been selling a few things in order to: 1) Have cash available for future buys in areas I am more comfortable with: autoparts, gas, manufacturers. 2) Capital preservation. I got caught with my pants down going into late February - the resounding negative reaction to FFHs annual numbers was what caused the most problem. That threw me into a situation where I had to sell things at a loss to raise money to buy other things. I will never allow this to happen. Since March, I have made back all that I lost going into that dip, taken alot more money off the sidelines. If FFH went back up to its highs I would actually be up for 2009. I am unwilling to buy much right now. I am wondering if I have become anchored to those low prices. I need to think this through a bit. I bought LUK at such a low price I have doubled my money. This however sets the bar ultra low for prices. I am philosphizing if it is a bad thing or if PARTNER24 has the right idea and I should make more effort to do nothing at all.

You CAN CHOOSE to play only when the odds are enormously in your favor. And that my friend is the key to investing to beat an index. Easy to say, exceedingly difficult to implement. Sold my Wells Fargo Calls - all of them this morning.

Ben, To any market watchers like ourselves who have been at this a few years this is a fascinating real life chance to see how markets behave. What the stress tests provide is clarity. We now know what the supposed bad case liabilities are. So the fear mongering of Taleb, Roubini, and their ilk takes on less meaning. The markets love clarity even if its bad news. The other effect is the less bad than last year/last quarter effect. Somewhere in there the markets are pricing the stimulus packages as well. Since the markets tend to generally predict economic movement (in part because more money is available from profits) we can surmise some kind of economic recovery is coming. The housing behaviour is a different bird. People confuse housing prices with housing inventory. Prices can still drop but inventory will get sopped up and the economic recovery associated with more building then starts to take effect. Wells should be able to easily raise a few billion in the preferreds market and some bond debt at reasonable levels, and make up the rest with cash flow. But it is certainly not a deal it was when we bought. The one I am really exicted about other that FFH is my GE call options I bought - strike 7.50 - 2011. It is taking everything in my power not to sell these. I figure GE will come out of this prior to Jan 2011 in the high 20s.

I think Pfizer has a potential to easily double from here. People always gripe about their drug pipeline but they are in the position where they can easily raise cash buy selling off older drugs and buying future blockbusters. I wont be buying any simply because FFH holds roughly 1.5 shares of pfizer/ffh share. That's got me covered.

I have been selling out my high strike price options and keeping the ones that are deep in the money. i.e. sold some AXP $25 but have 15 and 20s still; selling spy 85s but keeping spy 70s, 75s, and 80s. Nearly all of these expire some time in 2011 so there is no urgency. I just want the money available to reload should the opportunity present itself. I am running low debt levels right now and intend on keeping it that way. It is my feeling that SPY 85-90 is probably the bottom we would retrench to. It may not offer the opportunities we had in early March again, probably not for a few years now. I have also been moving Cdn currency to US in small amounts

Thanks Kyle, Mullen is an A-1 company. One of my major targets. FFH keeps stealing my ideas. :-). I want to get more in the sub $10 range if possible.

Well, Better get used to it. The long experiment in deregulation is over. It would have been over regardless of the stripe of government you elected. Its cyclical. The populous is fed up and disgusted and everything gets caught in the ensuing melee, the good, the bad, and the ugly. Just as deregulation overshot, we are now going to overshoot on the opposite side. Catch you in twenty years when it swings back the other way. Lets just hope we dont fall into a long period of trade protection with its high inflation, and high interest rates, and sluggish economies.

I have been taking profits a little here and there the last couple of weeks, from my Leaps positions. I have been taking profits off the highest strike prices for AXP, WFC, SBUX, and SPY Leaps, and keeping the deeper in the money leaps. One reaches a point were you can no longer safely buy more of one stock. I have been that way with FFH since the fall of 2008. So I would be happy to see the share price rise into the 400s US anytime about now. FFH is the worst performer in my entire portfolio in 2009 to this point. Go figure.

Pretty frickin' irritating - I gotta say. FFHs holdings trade up - FFH ughhh - Even since April 24th there must be up to $10/share in book value added just with increases in WFC, JNJ, GE, ICG...

Mullen is a really well run outfit. I have held the stock in the past and rebought it a couple of months ago. I was curious to see Prem mention it at the AGM. FFH must hold some common but not enough to be listed as a insider, yet. I just read their 2008 annual. These guys are working toward being the largest logistics company in O&G in North America. Unfortunately FFH's buying is driving the price up on me.

Any juicy tidbits. I didn't get a chance to listen.

Contrary to earlier comments they also have disclosed insurance losses during several of the major hurricanes and 9/11 prior to earnings releases.

The old disclosure argument. Those of us who were around during the lean 7 aren't complaining. FFH came under incredible pressure from shareholders to give more than a once per year look at their black box. The shorts had endless fodder to play with. Pre-2003 they didn't even do quarterly conference calls. Prem has just learned to play the game the best way possible to protect the shareholders. I think it is a resounding positive to get periodic updates particularly where they are material in nature.

Looks pretty good at first blush in nearly every count. Alot of volatility with the MTM accounting. sort of makes it meaningless for a company with a long term investing horizon.

On a personal basis, what is best to do - keep your money in the things you,ve bought, or take some profits for the next downturn? Basl, seems to me you answered your own question - when I cant decide something I do nothing. If the companies I have bought are common stock positions (i.e. no time value), and they are still trading below some estimate of their probable worth, that I have worked out then I would stay put. From here: 1) Stocks may continue to go up for awhile - the retrenchment may occur after the S&P 500 reaches 1000 and then comes back to 870 - if you sell here you will kick yourself repeatedly 2) Stocks may do absolutley nothing at all - heres hoping some dividends get reinstated, although steady state doesn't appear to be a normal market condition. 3) Stocks may go down and test previous lows in which case you will be happy you sold. If you can determine the scenario that will unfold I will give you all my money to invest as well. Since no one can actually know the behaviour of the markets in advance Ben Graham came up with a few strategies he called Margin of Safety so we could try and ignore the market behaviour except when beneficial.

That is a really interesting question. Here is my stab at it: 1) The dealerships were originally sold by GM to the franchisee. 2) There is the requirement to keep the dealerships in their brands - reducing brands saves money at the parent co: R&D, advertising etc. 3) I am guessing that the delearships have an arrangement on the service side for worker training etc. that is likely very costly for the parent. There is certainly a need for skilled mechanics. Dealerships make most of their money on service. The owner of my Mazda dealership went as far as too tell me that they make no money selling the cars. I would think that alot of the delarships will be able to stay open as repair only shops and do just as well as long as they can get access to the corporate training programs. This is all very interesting because the automobile is the epitome of a high tech operation. There is really nothing else save perhaps the airplane that has as much tech on it. I was watching an interview with Don Walker (ceo Magna) the other day. He talked about the tech side of the business, and how the engineering side of his business keeps Ontario at the forefront of the high tech industry.

Good article, misleading title. They were all kids or very young adults in the depression not 40 something investors.