twacowfca

Thanks. I always have a problem with off balance sheet transactions or people laying off risk (cat bonds, reinsurance, sidecars, etc.). If the policy is attractively written, why would you want to unload it? It appears that the sidecar can help insurers raise capital quickly to take advantage of hard markets. It appears that these SPEs are tranched. Do you know if retained interests are always equity or can they be a mix across the capital structure? How levered are these vehicles usually (how about LRE's)? Sidecars can have different purposes. The advantages include: limited lifespan. They can be liquidated when the reason for their existence is no longer there, for example if extraordinary rates go down. They don't have to be concerned with downgrades if they experience large losses because they are fully collateralized. Therefore, they can take on more risk if their owners like high risk/high return opportunities. Insurance companies that need to lay off tail risk like them because they help lower the risk of a downgrade. Hedge funds like them because their gains and losses are not generally positively correlated with financial risks. They generally aren't leveraged with debt, but some have preferred equity in their structures. :) Right. But let's walk through a structure. A hard market starts, then I think the SPE/sidecar ("B") is activated. 1. The premiums written by the Company ("A") will be shared on a quota basis with B 2. B books the premiums received and the LAE 3. Investors in B contribute securities to B and receive debt or equity in B in return 4. Losses develop and are paid. B pays down the waterfall/capital structure A usually invests in B. I am guessing they are in the equity. How levered is that equity piece? In other words, how risky is their investment? Let me know if those steps don't match your understanding. You are correct. Sidecars may have different purposes. Some may not be fully collateralized. Some may not be intended to lay off tail risk. :)

Thanks. I always have a problem with off balance sheet transactions or people laying off risk (cat bonds, reinsurance, sidecars, etc.). If the policy is attractively written, why would you want to unload it? It appears that the sidecar can help insurers raise capital quickly to take advantage of hard markets. It appears that these SPEs are tranched. Do you know if retained interests are always equity or can they be a mix across the capital structure? How levered are these vehicles usually (how about LRE's)? Sidecars can have different purposes. The advantages include: limited lifespan. They can be liquidated when the reason for their existence is no longer there, for example if extraordinary rates go down. They don't have to be concerned with downgrades if they experience large losses because they are fully collateralized. Therefore, they can take on more risk if their owners like high risk/high return opportunities. Insurance companies that need to lay off tail risk like them because they help lower the risk of a downgrade. Hedge funds like them because their gains and losses are not generally positively correlated with financial risks. They generally aren't leveraged with debt, but some have preferred equity in their structures. :)

Based the statutory requirements and inherent difficulty of value investing, I think most insurers think of themselves as spread based business. Their cost of capital is X and their investments earn Y-X. One of the biggest problems I have with most insurers is that they are asset gatherers. This ensures average performance from the left hand of your balance sheet. When the market softens, they have a choice: 1. Lessen premiums and put the extra capital into average investments, which will cause you to not earn your cost of capital 2. shrink the B/S (not too many do this from what I have seen) 3. continue to write insurance to lever your balance sheet to provide adequate returns (probably the most chosen) 4. Invest in higher return investments (most people reach for yield). What makes firms like MKL and BRK so great is that they safe have/seek higher return activities (growing CF companies at reasonable prices) . This allows them to earn their cost of capital without levering the balance sheet so they have the luxury of writing less in soft markets and more in hard markets. LRE is one of the few firms that chooses 2. They will only keep capital they can use effectively. This is the biggest flaw I have. If I cannot identify a bad insurer, how do I know the insurers I like are good? P This is the biggest flaw in valuing insurance companies: all sorts of hidden risk. Insurance companies fail for every reason imaginable. Let me count the ways: 1) Fraud, especially with smaller, unrated, or lightly regulated companies. This usually begins with inadequate reserving that gets papered over and then continues to grow until the company blows up. 2) Tail risk. This goes back to the 18th and 19th centuries and earlier. Read The merchant of Venice. Typically, a fire insurance company would do well until a fire in a city coincided with a big wind that sparked a conflagration. End of insurance company. Enter Cologne Re a new type of reinsurance company that other companies could access to lay off their geographical risk. 3) Regulatory risk. Geico, for example, got between a rock and a hard place in the 1970's when they had been expanding by offering attractive rates and targeting poorer risks. Then, the regulators wouldn't let them raise rates as inflation started to bite around the time Nixon imposed price controls. 4) Black swan. The massive development of asbestos claims decades after policies had been written was a true black swan that almost put Lloyd's of London under""

+1 giofranchi PS I won't even try to answer your question about sidecars, because we all know who is really knowledgeable on that topic (among many others! :) ) Here's the two cents worth from the board's resident student (non expert). Sidecars are off balance sheet vehicles. Think Enron. (just kidding). :) Actually, the insurance sidecars set up in the US, Bermuda, and reputable, international insurers adhere to a standard that is the same as something in the US tax code for trusts. It's Section 4--- something. Once the sidecar is established as being fully collateralized, it is then rated by S&P or some other reputable rating agency who will then assign a rating to it. At that point, it's something solid that investors can count on. For example, in one that I'm familiar with, the manager of the sidecar has two seats on the board of directors of the sidecar and the investors or outside directors have a majority of the board seats. That oversight helps ensure that the managers will adhere to the covenants of the doccuments that define the sidecar, the chief of which is that the maximum possible payments on policies written by the sidecar will not exceed the liquid assets. Those monetary assets typically would be invested in T bills as specified in the trust documents.

twacowfca, on page 21 of the presentation you find an annualized investment return of 9,6% since formation of GLRE (2005-2011): 2005: 14.2% 2006: 24.4% 2007: 5.9% 2008: (17.6%) 2009: 32.1% 2010: 11.0% 2011: 2.1% 2012 YTD: 10.5% Those are all after fees and expenses. That’s why I think in more normal times Mr. Einhorn might achieve a 10%-15% investment return after fees and expenses. Actually, from 1996 (inception of his fund) until 2006 Mr. Einhorn achieved an annualized return of 29% (I don’t know if before or after fees… :)). giofranchi Those are very good returns. Any fund manager who beats the S&P500 by 4% per annum after fees is exceptional. Plus, Greenlight Re has a huge advantage over other funds in that they are protected from having funds withdrawn by investors at the worst possible time when the market takes a dive or when they underperform. :)

Well twacowfca, I know that what you say about Mr. Einhorn and about GLRE is correct, but: 1) Mr. Einhorn is a good investor, not a great one: true, but I think his long/short value based with macro hedges way of investing is very conservative. It might not lead to outstanding results all the times, but it surely is conservative. And I like conservative investing. Actually, I think that conservative investing is the only kind of investing I could agree with. I think those who shoot for the sky still have to learn how to make their capital truly and effectively work for themselves. That is not to say that I admire cowards! I would never leave my capital in very short term bonds, which earn a pittance! 2) GLRE could not write a lot of business, so the leverage they have gotten from their model has not been great: true, but I like a reinsurer which is underleveraged, a 10% decline in the value of their investments means just a 14% decline in the value of their equity, compared to a 25% decline in the equity of their average peer competitor. And that makes me sleep soundly at night! 3) Notwithstanding 1) and 2), they have achieved a CAGR in BV per share of 11.7% from 2004 to 2011. Not bad, if you think that those years were among the most difficult for investing! What’s not to like about 1), 2), and 3)? Please look also at page 39 of the presentation in attachment: if they grow invested assets to 175% of capital, they would still be underleveraged compared to their peers. Earned Premium at 50% of capital is also a conservative number. With investment returns in between 10% and 15% (reasonable for a “good” investor like Mr. Einhorn) and with a combined ratio in between 90% and 100% (reasonable for a “good” underwriter), they would be compounding BV per share in between 18% and 31% annualized. I bought in at book value. giofranchi Thank you, Giofranchi, I'll take a look at their presentation. Are the 10% to 15% returns on stock investments you anticipate before or after Mr Einhorn's investment management company takes their cut? How much is the cut? Is it the usual 2% and 20% or is it more or less?

I think their returns going forward will average about what they have been for the more than two decades combined record of Brindle at Lloyd's plus Lancashire, about 19.5%. Realize that about one year in ten, they may have a loss that will wipe out about 20% of their equity that would take about 4 quarters to make up, assuming that rates would go up a lot, perhaps 20% or more after a large industry wide loss. Optimistically, they could do better than that. Their first sidecar is performing better than expected, despite large industry losses recently. Their new and very different sidecar, Saltire, looks like it will be a huge hit in the market. Please see the LRE thread for more info on it. These could be expected to add about 1 1/2 to 2% to their normalized ROE. Plus, they recently locked in $130M in ten year fixed debt at a good rate. That will give them the capacity to write more business if they want to do so at a lower cost of capital during a time of firming rates after the industry feels the full impact of Sandy. :)

Well, I guess you are right: the claim payment duration for their portfolio averages between 1.5 – 3 years. twacowfca, I looked for it hastily this morning, but could not find it: which is the average claim payment duration for Lancashire? Thank you, giofranchi The average time til payment of a claim for property cat exposed (re)insurers varries in a band that usually averages about 18 months, depending on the types of claims they are paying and if some claims are contested. Retrocessional claims are settled quickly normally, but when there is a super cat, claims get complicated as they often go around in a circle or even a spiral from one company to another and back to the original insurer as in the LMX spiral of the mid 1980's. The phenomenon of loss creep is much more prevalent after a very large event. That said, Lancashire's usual average time til payment of claims has been about 18 months, until recently, but with the strange supercats of 2011 and the surprising demand of the Italian authorities that the hulk of the cruise ship be removed from the rocks in one piece (which has been fully reserved) instead of piecemeal means that their average time until claims are paid is now almost two years. twacowfca, thank you! Your answer is accurate and precise as usual. Here is something I don’t understand though: you once wrote that Mr. Brindle could not invest the way Mr. Buffett does, because Lancashire concentrates on short tail contracts, while Mr. Buffett could hold the float for much longer. If that is really the case, how do you explain the way Mr. Einhorn invests? GRLE, just like Lancashire, underwrites short tail contracts, but invests almost nothing in short-term low-yielding bonds. What am I missing here? giofranchi I haven't looked that closely at Greenlight Re for a few reasons. I think Mr. Einhorn is a good investor, but not great. (very few are great, in my opinion) Mr. Einhorn gets a rather large amount of the profits, before the remainder are available for the shareholders. Greenlight has not been able to write a lot of property business and still keep their good rating. Thus the leverage they have gotten from their model has not been great. S&P discounts assets according to type when they rate a company. They discount equity investments by 39% compared to high grade, low duration, sovereign debt. Thus, if Greenlight invested in high quality, low duration sovereign debt instead of equity, they could write perhaps 65% more insurance dollar for dollar of invested assets. It is very hard for a start up to participate in the best opportunities, even if they know where these are and how to do this. It's like being a rookie fighter pilot. You will be placed in the most vulnerable spot in the squadron until you earn your wings. Mr Einhorn is a good poker player, but playing in this league is more about knowing the players and being respected for your knowledge and experience than for being smart in another field, especially as an absentee owner. As such, opportunities may be limited to the more commoditized types of reinsurance that are price sensitive. Even Brindle as one of the most respected players in the industry had to cool his heels for a year or two after LRE's start up before LRE was able to first participate in and then become the lead underwriter in some of the better niches. For these and perhaps other reasons, Greenlight Re has experienced P/B contraction since immediately after their IPO. They are a better buy now than then. :)

My expectation/interpretation would be slightly different. Short tails will benefit from this environment, but it will only help them earn their cost of capital while rates are low. I think its the long tails that could benefit more. They should be able to lock in very favorable costs of capital for years (a gift that keeps on giving). I think its hard to predict what rates will be in the future. Firms like MKL and BRK I think will especially benefit because they invest in high quality equities with growing cash flows, which can help offset some risk of multiple contraction as the earnings will be higher. Regardless, I anticipate any high quality insurer to do well. twacowfca, I have learned a lot about insurance from you. If I were to start an "Insurance Questions" thread, would participate? From what i know about GLRE, they are primarily short tail. Thank you for your compliment, but my participation in an insurance questions thread would merely reveal my ignorance about the answers to most questions. I know a lot about Lancashire, but Lancashire is very different from other companies. However, I might learn a lot from what others contribute to that thread.

Well, I guess you are right: the claim payment duration for their portfolio averages between 1.5 – 3 years. twacowfca, I looked for it hastily this morning, but could not find it: which is the average claim payment duration for Lancashire? Thank you, giofranchi The average time til payment of a claim for property cat exposed (re)insurers varries in a band that usually averages about 18 months, depending on the types of claims they are paying and if some claims are contested. Retrocessional claims are settled quickly normally, but when there is a super cat, claims get complicated as they often go around in a circle or even a spiral from one company to another and back to the original insurer as in the LMX spiral of the mid 1980's. The phenomenon of loss creep is much more prevalent after a very large event. That said, Lancashire's usual average time til payment of claims has been about 18 months, until recently, but with the strange supercats of 2011 and the surprising demand of the Italian authorities that the hulk of the cruise ship be removed from the rocks in one piece (which has been fully reserved) instead of piecemeal means that their average time until claims are paid is now almost two years.

Thank you very much twacowfca, very nice discussion! I got a terrible cold and I was in bed the last two days, so I can read your impressions from the meeting just now. It seems that the so-called “new normal” is very good news for Lancashire! I also find Mr. Brandon’s comment about the stock market interesting. Time will tell! giofranchi I hope you are feeling better. The low yield regime with firming P&C rates should especially favor short tail property insurers that aren't mainly dependent on investment yields. The firming rates for companies that make most of their profits from underwriting should more than make up for the lower yields on their relatively small investment portfolios. P&C companies with sizeable long tailed casualty books may find it more difficult to see improvements in their ROE's as low yields may cancel much of the gains from firming rates (firming seems to be the better term, not hardening). Not only Lancashire, but a number of other insurers in the Lloyd's and Bermuda axis come to mind as potentially benefiting from better ROE's going forward. Companies with longer tail books and good underwriting discipline that are good equity investors may also do relatively well, especially if the stock market doesn't experience a P/E contraction. Let's put the cat exposed property insurance market in perspective. The last seven years have included the two biggest cat loss years ever with the KRW hurricanes of 2005 and the multiple super cats of 2011. 2008 and Q4 of 2012 have also produced large cat losses. Oh! By the way, wasn't there some sort of financial crisis that also destroyed enormous value a few years ago? My point is that normalization of the losses experienced in the last seven years should by itself produce much better returns in the future.

The tone was rather subdued, compared to last year that was after the worst period ever for the P&C industry. This year most (re)insurers are facing the uncertainty of Sandy instead of the prospect of celebrating what would have been on of the best years ever. Rates will stay firm and probably harden a little post Sandy, but that's not enough to celebrate because everyone is facing low returns on their investments. The impact if low rates is estimated to be comparable to the KRW hurricanes of 2005, destroying the value of enormous capital annually. Nobody is of a mind to write business at an underwriting loss. 80% of historical industry returns have been made from investing in the past. Now everyone realizes they are going to have to make their money on underwriting or fold up. Now everyone realizes they are going to have to make their money on underwriting or fold up. DO they? If that was the case I think the mkt would be a lot harder its really the same problem in the lifeco biz. insurance rates are going up but not to a level that anyone is making any dough. Let me rephrase my comment. Virtually everyone at the meeting realizes that the only way to make more than their cost of capital is by passing on P&C business that isn't expected to make an underwriting profit because investment returns are so low. Property rates especially and also casualty rates are creeping upward in response to better underwriting discipline. No one is talking about a hard or a soft market. That has connotations of boom or bust. The new normal is focus on underwriting discipline.

The tone was rather subdued, compared to last year that was after the worst period ever for the P&C industry. This year most (re)insurers are facing the uncertainty of Sandy instead of the prospect of celebrating what would have been on of the best years ever. Rates will stay firm and probably harden a little post Sandy, but that's not enough to celebrate because everyone is facing low returns on their investments. The impact if low rates is estimated to be comparable to the KRW hurricanes of 2005, destroying the value of enormous capital annually. Nobody is of a mind to write business at an underwriting loss. 80% of historical industry returns have been made from investing in the past. Now everyone realizes they are going to have to make their money on underwriting or fold up.

It was great to see Joe Brandon back as a CEO on one of the panels. He says that the situation at Transatlantic as a division of Allegheny is in no way to be compared to the situation at Gen Re when Buffett bought it and soon found that their reserves needed to be strengthened by $6B. Transatlantic doesn't need surgery. He's very pleased with what he sees. Interestingly, Joe made a remark in passing that indicated that he wouldn't be surprised if the equity market pulled back 25% in the near future.

Good article. Thank you.

Good speakers today. One CEO says he expects Sandy's loss to be above $20B. Another CEO says the P&C reinsurance industry is over capitalized by $25B. Therefore Sandy should sop up some of the excess capital as reinsurance losses may be 1/3 to 1/2 the total industry loss, depending on the extent of the loss. ILS are leading to a moderation of the hard/soft market cycle with smaller swings because the capital comes in as needed and doesn't drag down returns when the market softens as it is then withdrawn. This is much better than when there used to be a lot of startups when the market hardened after a big loss. That extra capital would then drag down returns for years after the market softened. more later.

I'm on island time at the annual S&P insurance conference in Bermuda. Are there any questions to be posed the CEO's or others in the sessions?

Barron's has a great, short article in today's paper. Try googling the above if you don't have a subscription. Let me add something that doesn't appear in the article. BRK's annual growth in BV/SH has averaged only about 10%/ year for the last decade, a lot less than the 20%+ annual growth before that. Interestingly, BRK's BV/SH growth in the last decade was still about double the average annual increase in the value of the S&P500 plus dividends. That's about the same difference as it was in the earlier years when BRK's BV/SH was growing at about double the higher growth rate of the S& P500 then. :) The Barron's article makes a very good case that the $22B elephant that got away this spring because they couldn't agree on price was Chubb. If that's the one, the purchase price that Warren was willing to pay was probably about $82/SH or 1.4 times BV for a company with decent underwriting, but mediocre investing results. That's still a good deal for BRK because Chubb's returns on their $44B or so investments could be much improved. Even without improvement, Chubb's normalized earnings per share should add about $2B to BRK's bottom line. Chubb halted their buybacks after taking a big hit from Sandy. Could that be a motivator to resume talking with BRK?

YES I would.. irregardless of what class of asset it is.. 15% after that many years is tremendous I guess you wouldn't include Walter Schloss as a 'superinvestor' then even though Buffett calls him one It's not the return achieved but the combination of return resulting from individual efforts to obtain that return. Schloss is clearly a superinvestor. It's by virtue of the fact that he selected various securities to achieve that return. Someone invested in his fund or an index fund is not a superinvestor. By your definition, hiring an architect and contractor who build a beautiful home makes one a great homebuilder as well. Or, by choosing a good fantasy football team makes one a great football player. So, if someone works 100 hours a week vs 1 hour per month, yet have the same returns - the 100 hour per week guy is more super than the other? Now, if the 100 hour per week guy is a lot "less risky" whatever that means, then, yeah, I can buy that, but not just returns and work ethic combined. By the way, Buffett called guys that were "superinvestors" did not beat an index by a couple points. These guys crushed it. You should beat it by at least 5% to be "super". anything else is good or great, etc. What is average, good and great to you guys??? This doesn't look too super. :P http://quote.morningstar.com/fund/f.aspx?t=CMAFX That's exactly what I said above Paul: If you beat the market long-term by 3% annually, especially if you run a fund because you have a significant amount of limitations (redemptions, investment limits, client concerns, frictional costs, regulatory hurdles, etc), then you would be considered in the great category of investment managers...as only about 2% of fund managers get in that category! If you beat it by more than that, then you could be considered in the superinvestor category. Schloss and Van Den Berg are both superinvestors. Cheers! In terms of working 100 hours versus 1 hour. If you go to the dentist and get your tooth pulled out in one hour, does that suggest you should be pulling teeth versus the guy who has worked at it for thousands, if not tens of thousands of hours? The argument just doesn't jive. I'm the first to criticize how awful the investment industry is, but I have to tell you that there are plenty of clients who haven't got a clue what it takes to be a good investor, after being on both sides of the coin. Some of the finer details of the traits of these types of clients: - If you aren't beating the market every year by five percent, they ask you what is wrong with you? - They pull money right at the bottom almost every time! - They ALWAYS second guess your decisions...cannot emphasize enough! - They don't realize the difference between looking after personal capital (no restrictions, totally temperament based, captive capital) and public capital (redemptions - not captive, restrictions, multiple-temperaments). - We cannot make mistakes, but the destruction of their own wealth can be without precedent! That being said, I love the business. I love what I do. And I'm more than happy to put up with the gripes, since we are serving them...but the irony in client behavior is quite perverse...and in the general investing public too, including those on here that manage their own personal capital! Cheers! Interestingly, Arnie relates in the great video that the 38 year annual return of the stocks in his clients portfolios was 15%+ per annum. That qualifies him as being a superinvestor in my book. The reason that the clients actual return was 13%+ was that he always kept 20% of the assets in cash. Also, he has been exceptional in communicating with his clients, helping them understand the thoughtfulness of his team's decisions and the exceptional care of his clients' funds. This very likely encouraged many of his clients stay with him for the long run and actually realize those exceptional returns. :)

BLS is still objective in their statistics, but the US Department of Defense apparently may have helped cook the books for GDP by front loading their (until then declining) purchases into the latest reporting period, according to a recent Barron's article.

While there's room to debate whether the restaurants are shitholes or not, it's absolutely clear that the industry is a shit-industry. There are thousands of participants, extremely low barriers to entry and cut-throat competition. These chain restaurants continuously face pressure on their margins from every little immigrant-run eatery that pops up. While there may be room for both the chains and the immigrant restaurants, clearly this is a shitty place to try to make good money. But, I guess that's consistent with FFH's primary business of P&C insurance, which is also a highly competitive (shitty!) industry where there's little potential to build a moat. SJ As far as I know, the top 25% of restaurant chains returned 279% from 2001 to 2011. The median of restaurant chains returned 113%. The S&P500 returned 33%. “The most valuable business in the world are brand royalty businesses that can grow without capital investment” Bill Ackman on the new Burger King franchise business model. Maybe, Imvescor is not the case, but surely there are some fast-food restaurant chains that are valuable businesses! giofranchi I agree. Owning and operating restaurants is rarely a good returning business unless the food is great or the location is very desirable. However, a franchising business can be very profitable if the operation is good enough to be attractive to increasing numbers of franchisees.

Yup. The CEO's in the London Bermuda axis are now talking double the first estimates or more. Losses way above the threshold for attachment of reinsurance policies. The big kicker is business interruption claims with the shutdown in the transportation system in NY and NJ.

Thank you! I am very cautious to bet big on any idea of another investor… whoever the other investor is… it is one thing to invest in FFH, it is completely a different thing to invest in RIM, just because Mr. Watsa did it… I don't like it and I don't do it. I hope you agree with me! Mr. Martin Whitman is no exception: I remember I read in “Confidence Game” that Mr. Whitman held a large stake in MBIA and he had this to comment about Mr. Ackman: “He is a young man, very good at advertising himself, but doesn’t understand insurance!” Really?!? ??? giofranchi Warren is in a class all by himself in investing. Virtually all of Warren's major investments in publicly traded companies have worked out very well when he made the investment decision, not always when he allowed someone else to make the decision. When a sizeable investment has gotten in trouble, Warren has gone to great lengths to do everything possible to retrieve the investment, for example Sal. Brothers, Geico. Marty, Bill, Mason and other value investors bailed out of USG stock, and Marty bought USG's debt because he knew it would be safe if he got most of it so that he could control the Unsecured Creditors Committee. Even so, the good will and mutual respect between Marty and Warren was key to a successful outcome for both debt and equity. By the way, Marty didn't make out all that badly. He bought USG's debt at 50 cents on the dollar. He got paid 100 cents on the dollar plus five years of accumulated interest. :)

It was larger in proportion in one sense, but about the same in another sense. In retrospect, it was much too large because there were too many moving parts to the situation. I wouldn't have touched USG with a ten foot pole if Warren and Marty hadn't been involved and pulling together, a most unusual situation Cpt11 when Equity and creditors are typically at each others throats. :) The key known variables were: 1) USG was a gem that was minting money during the housing boom. Warren owned a lot of it along with other steady investors like Knauf. 2) The CEO and Chairman of USG, Bill Foote, was highly ethical and followed Warren's lead. The CEOs and BODs of W. R. Grace and Owens Corning were also determined to fight the bogus claims and not give up their whole companies as previous asbestos defendants had done. 3) Marty Whitman controlled the Unsecured Creditors Committee, and he was determined to be paid in full without shafting Warren. 4) USG's asbestos liability was real although almost all of the claims were bogus and could not be verified. However, all the legitimate liability was confined to one subsidiary. The other subsidiaries were worth then about six times what we paid at the low point in Cpt 11. Despite these strengths, there was a black swan weakness that was unknown at the time of the original investment. The district judge handling their case and others as a special situation to relieve the overwhelmed bankruptcy courts was unethically close to the plaintiffs with the bogus claims. A committee of the US Court of Appeals voted to remove him from the case, and he resigned from the bench before that ruling took effect. The removal of a US District Judge from a case is almost unheard of. :)

Exactly. To invert: sell high, and then buy low. :)