maxthetrade

If they really were hedging for a 90% selloff there would have been much cheaper ways to do this, e.g. cheap way out of the money options. IMO they speculated and it went wrong. The cash outflow simply became too big and they folded. The bad stock picking aggravated the situation.

Pete, I agree. And basically I think the change is an healthy one and should be welcomed. Many people though disagree. And that's why I would like to know if they see risks that I might have overlooked. What can go wrong? How probable is it? And which will be the consequences on the whole company? Cheers, Gio Well, the biggest risk in my opinion is that they could make another ill timed macro bet just at the wrong time or make a bad aquisition. I really don't get it, how can you play defense for years and now that the cycle is long in its tooth and valuations are very high go on the offense? Other risks are that their recent string of abysmal stock picks could continue or that it turns out that underwriting isn't as good as most think now because they benefited from the very low catastophy losses in recent years. Don't get me wrong I have a position in FFH and won't sell at current prices but their recent moves leave me uneasy.

Well, perhaps lying is a bit too harsh. Let's just say that he isn't telling us the real reason for his change of mind and leaves a lot of questions unadressed. What happened to high valuations, ghost cities and the housing bubble in China etc.?

He sounds like a cartain manic depressive fellow I want to sell some shares to... really strange. Yea - This is getting bizarre. I don't have any issues with the acquisition in and of itself, but the 180 degree turn on the U.S. markets as the result of the election with no commentary on rising rates, falling liquidity, strengthening dollar, declining corproate profits, levered corporations, and valuations that appear excessive certainly seems strange. Either he really believes this bullshit or he is lying to his shareholders, I find both alternatives alarming. Somehow this reminds me of Druckenmiller in early 2000 when he went long at exactly the wrong moment because he couldn't stand it anymore that everyone else was making money hand over fist.

He sounds like a cartain manic depressive fellow I want to sell some shares to... really strange.

Here is the complete memo: http://www.wsj.com//public/resources/documents/GenReCEOsuccession.pdf

Niels C. Jensen has some good thoughts on the Brexit: http://www.arpinvestments.com/downloads/Absolute-Return-Letter/2016/The%20Absolute%20Return_Letter%200416.pdf

As long as Berkshire converts $1 in retained earnings into $1.x of market value it makes much more sense to retain earnings instead of converting $1 into $0.x of dividends. If you can find investments that compound faster just sell shares, what is so difficult to grasp about this concept?

I second Ben Hacker's recommendation, I think LUK is almost ridiculously undervalued because it's widely misunderstood and or because of the poor performance recently. One can certainly argue about the degree of undervaluation and on the merit of some of their recent investments but it's hard for me to imagine how to loose money at this valuation. Needless to say that I'm very long. BTW, thanks Ben for the nice write up!

Indeed fantastic!

Pasta and bread (especially the white varities) are highly processed grains, they can be easily digested and spike your blood sugar. Whole grains on the other hand are slowly digested, contain lots of micro nutrients and keep you full for a long time.

Try brown rice, millet, buck wheat (Kasha), steel cut oats or rolled oats (not precooked instant oats), potatoes, sweet potatoes, winter squash, beans, lentils etc. I eat them ad libitum (with lots of veggies and some fruit) every day and don't gain any weight - actually I lost over 40 pounds over the first year after switching to a healthy diet. I am never hungry, have excellent lab tests and feel so much better than on a conventional diet, can't imagine going back.

Hilarious video from german TV:

Interesting FuW interview with Gundlach: http://www.fuw.ch/article/i-just-hope-the-fed-thinks-carefully-about-what-it-is-doing/

Currency futures are by far the cheapest way to hedge currency risk. The imbedded interest rates are much better than you can get as a retail investor. When the contracts come due and you don't want to take delivery of the underlying currency you simply roll the contracts to a future expiration date, i.e. you buy/sell the contract due and sell/buy the contract with a later expiration date. The contract with the next expiration date is usually the most liquid. At IB it's very cheap to trade futures.

MS makes an interesting point why profit margins won't mean revert: http://www.businessinsider.com/ms-why-profit-margins-wont-mean-revert-2014-10

What an amazing life! http://www.telegraph.co.uk/finance/personalfinance/investing/11048689/108-year-old-investor-I-doubled-my-money-in-1929-crash-and-Im-still-winning.html

Two Junior analysts with the Name of Rentrop and they are located in Bonn so they are probably associated with Norman Rentrop. I don't want to comment on him but you can find a lot of stuff by googling the name.

http://articles.economictimes.indiatimes.com/2014-01-20/news/46374822_1_prem-watsa-india-infoline-thomas-cook

I have always viewed Fairfax more as a hedge fund, so I have no problem with them speculating in CPI derivatives, buying BBRY or hedging their portfolio. My main criticism is that they got position sizing terribly wrong, e.g. people keep saying they invested only such a tiny percentage of assets in BBRY but I think the appropriate measure is the percentage of equity they invest in something. Or why hedge 100% of your equity portfolio, wouldn't say 80% have served the purpose just as well or better?

Buybacks are basically like any other non maintenance cap-ex and should be treated equally in a DCF. Whether a company buys its own stock, aquires another company or spends the cash on any other growth cap-ex is irrelevant, in all cases the cash can't be taken out in the year the Investment is made but future FCF will (hopefully) be higher. If you discount FCF and project future growth from growth cap-ex you're double counting.

+1

Good article about a major threat to the profitability of the reinsurance industry: http://www.pionline.com/article/20130826/REG/130829926 I wonder how much the recent moves by Berkshire and Lancashire are related to these trends. It will also be interesting to watch how Markels entry to the reinsurance field works out.

Why not go directly to the source? S&P gives 98.35 for operating earnings and 87.70 for reported earnings per end of Q1. As of end of Q2 with 81.4% of companies having reported the respective numbers are 99.50 and 91.43. http://eu.spindices.com/documents/additional-material/sp-500-eps-est.xlsx

Futures are by far the cheapest way to hedge currency exposure, simply roll them into the next cycle at expiration. Very cheap and easy to do if you have an Interactive Brokers account.