Packer16

No you do not but I think you pay a little more if you are not a CFA or CFA candidate. You do get CPE for the CFA so that is plus. Packer

Is anyone else going to this conference? It is in NYC on Dec 3-4 and is going to have Marty Fridson (WEST board member & HY analyst) and the int'l manager from 3rd Ave speaking amongst others. The cost is higher then other conferences but last year in Toronto the conference was great. If anyone is going or is in NYC on those dates, let me know and we can meet up for dinner one of the two nights. Packer

Thx for the article oec. The idea of doctor patient relationship is the key and giving the patent the economic resources directly (not via a third-party (be it insurance cos or the govt) is the key to cost control. If the patient does not have direct control of the economics of the situation, the pigs start lining up for favors and those who can lobby the best get the best deals (be it from the insurance cos or the gov't). Inflation occurs in services (and will continue) where the price is not clearly paid for the consumer directly. If you want to subsidize health care that is fine but let the consumer decide where to spend that money not the third-party. We need the third-party to pay for some services (maybe catastrophic insurance) but we should try to minimize the number of services paid for in this way to reduce the wrong incentives. The same is true of education (another area where third-parties pay large portions of the cost) where the costs are out of control. Much like Hayek and other observed about prices in the general controlled economies of the 1970s, we are seeing in healthcare and education today. The solution is to let the consumers have the power to decide what a service is worth and provide as few general subsidies as possible. (This does not mean cut off aid to those who cannot afford it but to remove general subsidies paid directly to institutions from third-parties. The subsidies should be paid directly to the people who need them and let them decide how to allocate the subsidy.)

How about a third path. The main problem as I see it is the mixing of catastrophic coverage with routine care via regulated monopolies. If we divide the problem into 2 areas I think the answer to the problem will make more sense. For the routine care, the market should set the rates and individuals could chose providers/care providers. For the catastrophic care, either the gov't or insurance can compete for the business. Employers would provide a certain $ amount for routine care and pay for a catastrophic policy from either the gov't or an insurance company. The development of the catastrophic market can also be accessed by self employed individuals. This approach would also bend the cost curve down and use markets to everyone's advantage and remove the monopolistic health insurance providers from the equation. For the poor, routine care can be provided via subsidies. This would be using markets and gov't to everyone's advantage. Packer

I agree that something must be done but the crew running the show (primarily liberal democrats) are wed to a big government solution (trying to relive the 60s I guess) and have an aversion to markets. This combination has never led to lower prices except via rationing which clearly no one wants and markets are the only way to keep prices in check without rationing. From my perspective, markets can lead to lower costs but the anti-trust laws need to be enforced for health insurers. What we end up with is the worst of both worlds (little competition because of lack of anti-trust enforcement) and a costly government run and gamed program - much like Medicaid and Medicare is today. My concern is what has been created is a large new entitlement for which there is no money to pay for it. This will lead to higher taxes and more borrowing and may eventually lead the US to Japan-type fiscal deficits with no internal savings to pay for it (as Japan has). The best solution for most folks is a high deductible health insurance plan (to have smaller expenses set by market pricing) with some form of health savings account (to increase the US savings rate). For those for whom this plan is too expensive (let's say > than a certain % of income), the government can provide some sort of subsidy. This is the core of the Republican alternative for which the partisan politics in Washington has turned a deaf ear to. Packer

Earlier this year I switched out of some FUR for LXP. LXP has done some good shareholder friendly actions like buying back debt and preferred at a discount. The real question here is what will be the cash dividend when they re-instate it next year. Based upon the current history it may be 0.72 or 1.19 based upon 90% of FFO but analysts have a lower estimate (which is driving the stock price). So on a potential yield, basis it is undervalued compared to other Triple-net companies such as O and NNN which yield around 7% and imply a LXP value of $10 to $17. On an EBITDA basis, it is at about 10x EBITDA not cheap but cheaper than NNN and O which have EBITDA's of 17 and 19 respectively. LXP (if the CFs hold up) is like an inexpensive call option on triple-net RE. Before the current fall, I was considering moving back to FUR but given the current price I probably will stay with LXP. Packer

Does anyone know of any LT options that can be purchased on LT real interest rates? Whether we have inflation or deflation, I think LT real real rates in the US will be high due to the new health care entitlement and the associated debt added to an already stressed system. Packer

I agree with your approach but I don't think that inflation will result because the impact of foreign goods and services (which would be denominated in other currencies) is a small % of US end prices. I believe the number is something like 13%. What you may see is deflation in the rest of the world and some small inflation in the US and high real interest rates to pay for the US debt. The only time the US had a large inflation problem was when domestic costs were spiraling upward in the 1970s. I do not see this as an issue as we have an oversupply of labor and worldwide competition is keeping labor other prices in check. Although the appreciating currencies of other countries will moderate this check, these countries will also try keep their currencies low and thus keep inflation low. I think the real losers will be emerging countries trying to keep their currencies low (China, etc.) Packer Packer

I would be careful with this trade as one way to look at it is going long the dollar and short commodities, which I think is bad bet. I think the US$ will be devalued versus commodities and would depreciate against any currency whose country produced commodities all else being equal. The US spending may lead to a race to the bottom via gov't intervention but this does not always work out as intended. Packer

One aspect you need to take into account is interest rate parity. Unlike PPP, for which the currency can deviate at times greatly, interest rate parity is know quantity which will determine the spot and futures prices. The approach is to see if the results of the interest rate parity make sense with regards to PPP. Packer

What about a scenario where the $ declines by 50% and there is little inflation in the US due to a the small impact import prices will have on overall prices and the deflationary effects of deleveraging. The yen/euro, yuan and commodities will all rise but not effect inflation because they are a small portion of the prices of end goods and services. Packer

I got slammed by the downturn in 2008 (down 49.2%) and also through March (down an additional 22%) and have bounced back about 111% from the March low. I am sure others have done better over this time so I wanted to find out what they did to prevent a large decline in 2008 other staying in cash. TIA. Packer

Y'all, Has anyone looked at this money management firm? Based upon Whitman's TNAV + 2% AUM for money manager valuation both this firm and Boston Private attribute no value to their asset management companies. Packer

This appears to be a cheap (2.5 x EBITDA and 3.3 x FCF) satellite cable company. Does anyone who have personal experience with this firm. TIA. Packer

So does that mean at today's prices Fairfax is fairly valued and the upside is primarily in doing a new deal or putting excess capital to work at a good rate of return? As Fairfax appears to be selling at a premium to other cat insurers and in the insurance business I do not see many moats, is the higher premium a bet on future investment performance? Packer

Maybe I am missing something here but what is the purpose of diluting shareholders to buy in the minority interest in ORH? You can say the shares went to strong hands but doesn't FFH already have a strong shareholder base? How does it create intrinsic value other than lowering the public reporting costs or ORH? Was ORH's intrinsic value that much greater then FFH's when they are trading at about the same discount to book? I am having a hard time seeing the advantage other than a cosmetic one of appearence? TIA Packer

I would add groups of stocks who have good economic characteristics but have been forgotten by the market (prices have fallen to the point where analysts have stopped coverage and the only buyers are day traders and the firm itself) and have alot of asset conversions opportunties. Right now this would include radio and some TV stocks, some post-bankruptcy situations in natural resources, land companies, real estate operating firms and firms that utilize real estate in their operations (restaurants, waste management and amusement parks). In terms of the restaurant business creating vs. destroying value, a better way to look at it is a combination of a real estate business and a franchised branded product business. Where the operator focuses on this two part model (WEST, SNS, DINE, MCD and Dairy Queen), the business can be very profitable. Where the operator focuses on just expansion and purchases the underlying real estate, the business becomes capital inensive and the returns on capital decline. Packer

Has anyone looked at this name. It appears Goodwood is going to provide investment for a 2% mgmt fee. Does Goodwood have a good management record to more than overcome the 2% fee? TIA. Packer

Do any of you think this may be a signal that FFH is fully valued similar to the Berkshire General Re transaction or is it more of ORH is more undervalued the FFH and FFH is trying to capture arbitrage profits? Packer

Interesting article but I think they missed a huge point that high income residents of NY and other Eastern states are fleeing to go to Florida. I think it only takes a few of these guys (like Tom Galisano) to more than offset the declining population in the state. Florida has always had the income gap as the wealthier folks from the East retire there and the demand in the state is driven by recreation and tourism (typically not high paying jobs). Packer

I know a few of you have purchased preferred stock versus common stock of some firms. What drove you to that decision? I have a situation where an undervalued modestly leveraged firm has both preferred and common. The preferred is selling at 7% of face, is perpetual, pays a 6.5% dividend, the dividend has been suspended and is convertible into common at a 2757% of the current common price. The preferred has a coverage ratio of about 3:1. Given a typical EBITDA multiple, the total equity would be worth $187 million but the perferred trades for about $11 million and the common $26 million. What securtiy would you invest in? TIA Packer

Couldn't we argue that we have been in bear (range bound market) since 2000? So we have been in this type of market for 8 years already. So the turn around may not be that far down the road as long the gov't doesn't mess up the incentives too bad. Packer

Resource constraint is an interesting topic. This type of scenario has been around for at least 100s of years (think Malthus). Historically, whenever someone has had this type of scenario it has never come to pass. Why? If nothing is done, the scenario may come to pass but rarely is nothing done. Typically, the market has used price to signal the allocation of the scarce resource. With the incentives high, people's ingenuity have usually come up with an alternative. For example the major find a new oil or natural gas discovery that can be exploited with new technology (think shale gas). I think betting against the market and history is dangerous. In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution. Packer

I think with RoIC's ranging from 19% to 51% averaging in the 30%s with the bad ad environment we have today, radio may be down with the decline in advertising but it is not out. I just ask myself where else are you going to go if you want to build a brand in the US (radio, TV and internet, maybe outdoor or video games). The US is still the biggest and most valuable market in the world and these media firms are the gateways. One observation is the value of the overseas TV and radio firms have not declined like the US firms. The question in my mind is will the TV and radio firms co-opt technology advances like the telcos or will they be destroyed by them. I think they will co-opt. Packer

I think you need to look at specific segments to see the overvaluation. A good portion of the stock offerings were debt for equity swaps of real estate and finance firms. This is not the like the speculative housing or dot-com bubbles we have seen. Marty Whitman made a great observation in his latest letters - the past two years has been Catastrophe Investing where all sectors have been hit and this is not the norm. The norm is rolling recessions/depression in a few industries at a time. I think we are going back to the rolling recession and are not in the general recession era. Thus there will be opportunities on a sector by sector basis. Has anyone looked at some of the radio stocks, they appear cheap and analysts have been dropping thier coverages like flies. Packer