T-bone1

I'm not sure why you think these companies are awful, particularly DELL. LVLT is overlevered but has been doing the right things for a number of years (and FFH has done very well owning their debt). DELL is extremely profitable, cheap, and buying back a ton of shares. I don't have anything intelligent to say about RIMM, but I think it is worth looking at the returns FFH has made on "awful" companies like the brick group, international coal, sandridge energy etc . . . You pay a high price for a rosey concensus

http://www.reuters.com/article/2011/09/14/saccapital-lawsuit-idUSS1E78D0VH20110914?feedType=RSS&feedName=financialsSector&rpc=43 The judge has yet to rule on motions filed by other hedge fund defendants, including Daniel Loeb's Third Point Financial and Jim Chanos' Kynikos Associates, to dismiss the five-year-old lawsuit. "After five years of litigation, the court's ruling affirms, as we have always maintained, that this vexatious proceeding against us was entirely baseless and without merit," said SAC Capital's general counsel, Peter Nussbaum. A spokesman for Fairfax said the insurer will appeal the ruling, "which it believes is incorrect." Reuters, along with Bloomberg News, are intervenors in the civil lawsuit, seeking access to millions of pages of documents and depositions that have been sealed in the case. Reuters, for instance, is opposing a motion to keep sealed portions of Cohen's lengthy deposition in the dispute.

dissapointing, but not surprising. Cohen apparently learned from Milken and I would be shocked if there is much, if any, hard evidence to link SAC to any conspiracy - despite the fact that they may have encouraged/participated in/masterminded it

After the annual meeting Brian Bradstreet mentioned that he didn't think anyone would ever be paid off on a big CDS bet again - essentially saying that if Greece or someone else blew up, the debts would be restructured in a way that would not trigger CDS payment/settlement. This makes sense, because banks previously (still?) didn't have reserve any capital against selling sovereign CDS, because it was just like buying a AAA sovereign bond, which led to bankers selling a lot of this stuff to make "free" money. This is a systemic risk, so the politicians will likely insure that they never have to pay up on these contracts. For this reason, I would not be shocked if FFH bought cheap greek CDS a while ago, and is now essentially taking the trade off by buying the bonds. If they buy cheap long-dated bonds they get a lot of current income and if there is an acual default (unlikely in my opinion), their CDS will have to pay out.

http://www.zerohedge.com/news/so-much-value-investing-whitney-tilson-plunges-133-august-down-mass-redemption-inducing-211-ytd

along with a number of their subsidiaries . . . I haven't seen what (if any) rationale there is

I have a great deal of respect for Berkowitz and I assume he will continue to outperform the market over time, but his public comments do not seem to exactly match his actions. He said St. Joe was cheap because the land was so good, but no he calls it an asset manager. I guess that is true in that they are managing land, but I don't believe they are recieving asset managment fees for this. It just seems like a little bit of drift Much more importantly, I believe he articulated his strategy as going long all the cheap financials but keeping about 30% of the fund in cash in case things got worse in the real economy. Things are getting worse in the real economy (at least by all the quantifiable numbers) and yet he has paid out all of this cash for investments. Berkowitz could be and likely is correct about all of these investments, but I am bothered by his unwillingness to ever admit mistakes. Does he now say he doesn't need extra cash on hand? Why didn't he sell any AIG? Did he really make a multi billion investment based on the thesis that the government wouldn't sell below book value?

Looks like the bigbdrop in cash was from redemptions, not adding to his investments

someone is dumping a lot of shares this morning, trading as low as C$1.02 and already 430,000 shares traded . . .

Fairfax just disclosed a 15% stake in this microcap (symbol: CCPF) their ownership is actually through a convertible preferred and warrants looks like they bought the convert on June 3rd . . . stock is down a lot this week and below their $2.00 conversion price

I haven't done any work on this, but I don't really see a reason to be buying here. Does anyone who is buying have any thought on what this company is worth, other than its previous trading price? Does anyone have a thought on what it is worth now if these accusations materially damage the business even if it isn't a fraud? (which seems likely, regardless of whether or not its a fraud) I think there are other opportunities in the market to triple your money over time without risking losing it all . . . if you really want a triple or nothing, I would rather buy a call option on a good cheap company than speculate here. Either way, best of luck

This is good long term for FFH . . . this company is gassed up and ready for the hard market, but with hurricane season coming on the heels of these storms I think we could see another $400M underwriting loss in Q2. I guess this leads back to the same mental game that has been discussed on this board: that we want to buy FFH in a hard(ening) market, but we think the stock price will go down first due to the losses. I'm not much at timing, so I bought a little today . . .

Devastating tornadoes, floods, earthquakes overseas and a busier-than-usual hurricane season have U.S. insurance companies bracing for record losses in 2011. Insurers could suffer as much as $10 billion from weather-related losses in the United States in 2011, which is up from the average of $2 billion to $4 billion, according to EQECAT Inc, which provides disaster and risk models to insurance companies. On top of the potential U.S. losses, insurers are also reeling from disasters overseas, including large earthquakes across the Pacific Rim. And as if that was not enough, analysts now expect an above-average Atlantic hurricane season. “This is not a black swan year that is an absolute worst case, but it is significant and it is close to that,” said Jose Miranda, director of client advocacy at EQECAT Inc, which provides disaster and risk models to insurance companies. Globally — including the major earthquakes in New Zealand and Japan — U.S. and overseas insurers could post up to $55 billion in losses, EQECAT projects. Some insurers have already posted large losses due to the Japan and New Zealand quakes. Berkshire Hathaway Inc. lost $1.07 billion from the Japan earthquake and $412 million from the quake in New Zealand. During the annual meeting in Omaha, Nebraska April 30, CEO Warren Buffet said the company would likely post its first full-year loss in insurance underwriting in nine years. And insurance stocks have lagged the broader market because of investor worries about catastrophic losses. The S&P Insurance Index is flat since the beginning of the year, lagging the broader S&P 500 Index, which has risen 4.7 percent. ROUGH WEATHER In the United States, spring storms — and the billions of dollars in damage left behind — were the result of a rare confluence of more violent weather hitting densely populated areas, said James Aman, a senior meteorologist with Earth Networks Inc – Weatherbug. “It has been a particularly devastating year,” said Aman. Over a six-week period this spring, tornadoes ripped through Southeastern and Midwestern states flattening neighborhoods in large Southern cities such as Raleigh, North Carolina and Tuscaloosa, Alabama. So far, tornadoes have killed 365 people in the United States, a figure nearly six times higher than the three-year average of 64 deaths, according to the National Weather Service. Already, 1,151 tornadoes have occurred in the United States this year, nearing the 1,282 reported in all of 2010, but below the all-time high of 1,820 in 2004. The increase in spring storms has insurers preparing for the worst. In a recent interview with Reuters, Hartford Financial Services Group IncChief Executive Liam McGee said the company expected second quarter catastrophic losses to rise. “I don’t think there’s any question that there will be a bit more to handle,” McGee said May 2 after Hartford reported first quarter results. Others are increasing the disclosure of their losses. The nation’s largest home insurer, Allstate Corp., said last week it would take the unusual step of disclosing any monthly catastrophic loss estimates that exceed $150 million. The company projected the April storms would cost $1.4 billion and totaled more than 100,000 claims. As tornado season slows this summer, insurers will have to contend with a busy hurricane season, although less active than last year. The National Weather Service projects as many as 18 named storms this year, compared with the long-term historical average of about 11. Miranda said insurers avoided large losses last year, despite a record number of hurricanes, because none made landfall in the United States, a lucky break that is unlikely to be repeated. “Chances of that happening again are definitely slim,” he added.

I couldn't agree more Sanjeev. As an investor, it would be nice if hedge funds, high frequency traders etc would send all stocks down occassionally, or even have a flash crash this afternoon . . . but this is very bad socially and economically. The market exists to provide capital to the economy, not to be a casino (at least its not supposed to be a casino!). If FFH didn't have the backers it did/does and the management team it did/does, the company could have been driven under. This company is a tremendous force for good in countries all over the world - and I think their culture/employees/economic activity they create is a greater force for good than the very meaningful charity work they did. It would have been a horrible tradgedy if they were forced into BK or otherwise into the hands of regulators due to the actions of miscreants. . . . Of course buying the LEAPS was great, but I try not to be happy that this happened

Thansk QLEAP, I thought that was great

Information has come out in papers from two admitted insider traders that the Feds are looking at trading in a $3 Billion oversees account overseen directly by Steve himself, known as "the big book" . . . maybe if Raj gets convicted he will have some dirt to flip on SAC . . . http://www.businessinsider.com/trades-in-steve-cohen-account-being-investigated-2011-5

thanks Qleap!

Can someone please repost the link to the 2010 Fairfax AGM slides, I can't seem to find it. Thanks!

Bronco, not to pick a fight because I think we are roughly on the same page - and especially because I'm a Flyers fan - but I don't see how its dishonest. The board gave him $100MM (over 6 years) and bought his maps for $13MM (which already decorated the corporate campus and appraised for double) . . . shareholder friendly - Absolutely not! Agrregious, even for a free-wheeling oil and gas company - You Betcha! but I don't see what is dishonest here . . . Lots of company's pay their CEO's too much. It might not seem right or fair, and I'm not in favor of it, but it isn't dishonest in my opinion. Ray Irani at Occidental was making 3X what Aubrey was/is . . . should he get a free pass because oil went up while natural gas stayed low?

CRT, you are certainly in the majority! Whatever you think about McClendon buying stock at $60 on margin and almost bankrupting himself, then being bailed out by the company (I would imagine that I, along with the rest of the board, agree with your thoughts in this regard), I don't think anything he did was dishonest. He was buying stock on margin at $60 - stupid? yes! - but not dishonest like Angelo Mozzillo pumping his stock while selling. McClendon put his money where his mouth was (and additional monies as it turned out). The resulting "bonus" and company purchase of his map collection for $13MM was not shareholder friendly, but didn't have any effect on the value of the company ($15MM a year plus the maps is less than $0.05 per share). I think that the resultant criticism chastened the board of directors. They are still highly-paid and not entirely independant, but they are in the limelight, and I view the addition of Lou Simpson very positively. I sincerely believe that McClendon wants to get the stock back to its old highs to prove he was right at least as much as he wants to make money, and by industry standards his compensation has been high but not an outlier. This guy is working very hard for shareholders, even if it is for some vain or monetary purpose. Bottom line, I think the company is incredibly valuable and I just don't see any way that McClendon destroy or steals that value (In fact, I believe he is actively adding to it). With SEAM, Icahn, and Simpson around - I believe that the problem 99% of investors have with McClendon is more emotional than rational. This still might keep the value depressed, but not forever. For what it's worth, I think the break-up value of the company is significantly higher than the trading price, and Icahn isn't exactly known for his passive-buy-and-hold-forever strategy. . .

DCG, I've looked at just about every capital allocation decision they've made, and with one exeption (buying about $500MM of Antrim shale in Michigan) they have all worked out very well for shareholders. I believe Stanley Cates of SEAM pointed out in OID a year ago that the money they get from selling a portion of the assets they've bought (JV deals in their shale plays) don't flow through the income statement so the value isn't readily apparent. CHK uses full costs accounting, so drilling caries and up-front payments just lower the amount of the full cost pool. Even if you don't trust the above. With Carl Icahn taking a large position and threatening to agitate, SEAM owning 12% of the stock, and Lou Simpson recently joining the board of directors . . . I think a buyer today should have some level of comfort whatever their thoughts on Aubrey are.

Myth, I was never able to buy the SD preferreds, I think they are all held by large holders like FFH who don't sell . . . I like CHK over SD because I think it is safer, cheaper, less levered and has more upside. CHK will also be a much larger oil/liquids producer than SD, but never as a percentage of production. As far as oil upside - and temporarily ignoring debt and other assets (two categories I think CHK wins handily) . . . 1,000 shares of SD gets you about three acres of good oil shale (Mississipian, which is actually a carbonate), whereas 1,000 shares of CHK gets you about ten acres of good oil shale (eagle ford, utica, mississipian and others). On a per dollar basis, this is about equal, but CHK's shale is more diversified and thus safer . . . . The Mississippian isn't "proven" yet. CHK is hated and valued pessimistically in my opinion, and it has hidden assets all over it balance sheet and a lot of financial flexibility. I don't dislike SD, but I think the market is taking an optimisitic view of the Mississippian and that SD has limited financial flexibility and no "hidden" assets. SD has done very well creating value out of thin air with their royalty trust (the implied per acre price they were able to get from _____ (fill in the blank) income investors was pretty obsurd). SD will likely keep on doing this and do very well with it but . . . Long term I am in it for the natural gas potential. This is, coincidentally, the original thesis Sam Mitchel gave for getting in SD (which also has a lot of gas potential in the WTO). I think CHK has better gas assets, more diversified and equally good oil assts, better valuation, flexibility and upside. I like SD and only sold it recently because it combined with CHK was too big a portion of my portfolio

Bronco, I like the preferreds, the CHKDG's are usually a little cheaper and have a lower conversion price (but the dividends aren't qualified if that matters). I also own the LEAPs and I think they are very cheap. I think the stock is cheap at current gas/oil prices, but I think there is only one way for natural gas to go from here (long term), so LEAPS give you leverage to that too - and I don't think you are paying for it.

Chesapeake Energy

I agree Eric, I've been buying LEAPS on FTR for that reason . . . I particularly like that the high dividend yield makes the LEAPS cheap.