twacowfca

Did you buy a basket of these? Or are there particular ones that you're focusing on? Yes, we have purchased a basket of these. As long as they were selling at attractive prices, we would make a purchase. Occasionally, when the price of one or more of the issues gets ahead of the other issues, we will sell that issue and move into another.

Eliminating the lowest income tax bracket would be a highly productive way to do this. Reduced tax collections could be balanced by eliminating tax dodges in the current law and unproductive subsidies.

There is an unusual type of body fat called brown fat that is found mostly in the abdomen or broader ventral trunk area. It is capable of burning its own energy. Most people have very little, but when the body is exposed to prolonged, low ambient temperature, it increases dramatically in some people and acts like a portable electric blanket when needed. :) Been there, done that with the wild blueberries on the trail. Every 10 or 15 minutes I would have to take a trip to the bushes. The problem is in the seeds. It's hard, but not impossible to spit them out. Eric, have your night sweats gone away since you have stopped eating easily digested carbs late in the day? If so, perhaps you're merely wired to burn off the extra as you suggest. If not, it may be wise to rule out conditions and diseases that could be envolved such as hyperthyroidism, lymphomas, leukemia, adrenal tumor, Aids and especially in your case, hot flashes associated with menopause. :)

FYI - Here is a chart showing all of the FNMA and FMCC Preferred issues that are generally traded on the pink sheets. :)

Gen Re and the other BRK reinsurers have some overlap with Munich Re, but the potential for chasing the same business has to some degree been resolved by BRK and also MUV passing on business during the soft market. Many other reinsurers have also pulled back, and sharp observers like Montross and Berkley think the soft market has reached bottom. Munich Re is especially strong with 64% of its business in the EU where BRK has merely a small presence.

This is in our "no brainer" pile because we have become so familiar trading it for almost 2 1/2 years. This is what it always does in an up market when there is some credible catalyst that may remove uncertainty about their future. Fannie and Freddie up 31% and 35% for the day. Not nearly as much for the preferreds. This price action is typical with these volatile issues. Last summer, short sellers piled on and drove the price down to half tha previous close after the administration announced that they were delaying the announcement of their plan for F & F. The pricing on the less liquid preferreds is far from efficient. We have reduced our net long position a little as the prices have risen. However, if the past is a good guide, prices should continue to rise until D Day draws nigh. :)

Munich Re has made huge improvements in their underwriting discipline and investing in the last couple of years. They are being managed now much as Warren would like them to be managed. They will be in the sweet spot when Solvency II starts to pinch the European primary insurers increasingly in the next 1 - 3 years. Increased capital requirements are likely to be met mostly by ceding more premiums to well capitalized reinsurers like Munich Re. My valuation analysis is what a private buyer would be willing to pay for them. They wouldn't be willing to sell to almost all buyers, only to a buyer like BRK that would be hands off and supportive of their focus on building shareholder value. Referencing the recent Burlington Northern acquisition, Warren might be willing to pay a 40% to 50% premium to the current price for a world class reinsurer with enormous float that has been around much longer than Warren has. :) If MUV were valued by their sustainable float plus equity, as Warren would value them, a 40% premium to EOY BV would be a steal! Munich Re's investment portfolio recently had a market value of about € 185 million. If Warren could buy the whole company for € 30 million, BRK would get more than € 6.00 of sustainable investments for less than each € 1.00 of purchase price. :) Such an acquisition would not be unprecedented. Remember the Gen Re acquisition, an even bigger elephant to swallow, given BRK's smaller size then. A few days ago, Warren was quoted in a Washington Post article as saying that he was leaving the WPO board "because of other travel commitments linked to Berkshire Hathaway acquisitions abroad." This does not necessarily mean that there is an acquisition of Munich Re under consideration, but I don't think Warren would say no if they were available at a fair price. :)

Up another 24% today for both FNMA and FMCC. This is almost a double from their January 19, 2011 prices. The common has now almost caught up with the price increases for the more liquid preferred issues. :)

Congratulations! You get a gold star! :o

RLI looks interesting, Harry. How do they make money? Their acquisition costs look high in relation to their losses and premiums. Are these related to advertising, commissions or what? I could probably ferret some of this out with a little study, but your insights would be appreciated. Thanks.

Food for thought. No pun intended. ???

FFH is a great company, but we sold the great majority of our holding over a year ago when they delisted from the NYSE in view of the reduced liquidity.

Barrons still doesn't know what to make of Warren. Their latest article speculates that the estimated $50 billion in cash that BRK is projected to have on its balance sheet by EOY 2011 will be used to pay BRK's first dividend. This would be out of character because there are great large cap businesses selling at bargain prices that have been bypassed by the recent stock market advance. Let's see. Is there any large company out there with a market cap of about $30 billion that Warren especially likes? One that he likes so well that he would be willing to let the 10% preferreds he bought in the crisis be redeemed early, giving up a hefty coupon to increase his kitty for acquisition? Perhaps one led by a CEO that says he would be delighted for Warren to own more of his company than the 10% he already owns, while Warren says he would also be delighted to own a bigger chunk? A company that might take more travel time from his schedule to spend on acquisitions than he could spare without giving up his seats on Coca Cola's and Washington Post's boards? A company in his favorite industry? If you can name that company, you will also name our second largest holding. :)

Administration's plan delayed till after budget is presented week of Feb 13, 2011. This should allow the stock another three weeks to run up before D day. The preferreds have doubled since December and the common is now hopping to catch up. FNMA is up 23% and FMCC is up 28% today and up about 60% in the last week. :)

And the little known secret of Monish's success! :D

I hear what you are saying when it comes to taste, but sucrose is about 50% fructose where corn syrup is 55% fructose. There isn't much of a difference from a metabolism point of view. They are just about equally bad. --Eric You're right. When an enzyme breaks up sucrose, the products are half glucose and half fructose, not a great deal of difference than in the 55% fructose in high fructose corn syrup. However, one molecule of sucrose will briefly latch onto one sweetness receptor, while the same energy equivalent of one molecule of fructose plus one molecule of glucose will latch onto two sweetness receptors. The receptors signal the pancreas to put out a certain amount of insulin according to how much energy should be entering the bloodstream in the near future. Thus, the body's expectation is much greater for an equivalent amount of energy from glucose+fructose than from sucrose. Then, if you're not exercising vigorously, the excessive amount of insulin will cause quick storage of the extra energy that will eventually be stored as fat, and the overabundance of insulin will then drive down the blood sugar to a low level that stimulates additional consumption. The same process happens after drinking artificially sweetened "diet" drinks, an oxymoron if ever there was one!

Manufacturers increasingly have substituted high fructose corn syrup for sucrose because it's cheaper and tastes sweeter calorie for calorie. When given a sip in a taste test, consumers generally say they prefer the high fructose product. The reason is that a taste of sweetness is generally preferred to a taste of something less sweet. However, when given a choice, long term preference isn't toward fructose products. If it were, people would sweeten coffee with high fructose corn syrup instead of table sugar (sucrose), and relatively poor Mexican immigrants wouldn't pay twice as much for Cokes imported from Mexico that are sweetened with cane sugar than if they had bought Cokes bottled in the USA, sweetened with high fructose corn syrup! The physiology of carbohydrate metabolism sheds light on this paradox. There are sweetness receptors not only on the tongue, but also throughout the digestive tract. Fructose with its sweeter taste stimulates the pancreas to pump out too much insulin compared to other sources of carbohydrate. This results in increased fat storage and then reactive low blood sugar somewhat later. Sucrose is a lesser evil. Eating resistant starches is best.

Thanks for tips. I will certainly pick that one up given my own experiences with adding omega 3. Incidentally, have you hear of any studies done comparing a population like the Japanese who got the omega 3 through the diet, versus a New Zealander who tries to "cheat" by taking omega-3 supplements? I had a long drive to Sun Peaks today, and did a lot of thinking on that topic. Suppose you eat a big helping of french fries (high omega-6 yet low in omega-3) and then wait twenty minutes and chase it down with omega-3. Does that work? If your cells will take in the omega-6 in the absence of omega-3, will they hold out the "NO VACANCY" sign when the omega-3 comes floating by in the blood stream? Or conversely, suppose you waited longer before taking the supplement. Now all of your cells are holding out the "VACANCY" sign, but this time it's the omega-3 getting gobbled up. How do supplements really work in these systems where the body will accept one in lieu of the other? If you have too high a ratio in reverse (omega-3 to omega-6), what happens? Could you perhaps do even worse harm? I'd love to do research on this kind of thing. Healthy eating is definitely better than trying to neutralize junk food by taking supplements. Nevertheless, there is a substantial benefit from taking certain supplements, especially omega3, vitaminD and dietary fiber from natural sources. For example, taking omega3's with or immediately after a high fat meal results in a better blood lipid profile. Short or long chain omega3's are both taken up into the heart muscle as an energy source that helps the natural pacemaker work better, reducing irregularity,

LOL ;D

I have to agree and many thanks to the person who posted the link to the Sugar: The Bitter Truth video. This is actually the most significant thing I've learned in years -- I never liked sugar much (too sweet for me), but never understood it as a poison, until now. I didn't know that consuming fructose would raise my vLDL level, didn't know it would cause gout and hypertension, and I didn't know that food makers strip out the fiber to make it freeze and cook faster. Dammit that's an evil combination! Look, this is all raising the profits of the food makers (High fructose corn syrup is cheap) while it's raising the costs of Medicare and Obamacare. The costs have been externalized. Shareholders of Kraft and Coca Cola are laughing probably because the government is going after the banks instead -- how many people are dead from this financial crisis? How many are sick? This is making me think more about socially responsible investing. Do you care about the money... what matters to you? We talked a bit about lending shares to shorts and some found that unethical, but this goes way beyond that. My suggesting: institute a tax on foods where a healthy balance of sugar to fiber is out of whack. Would this raise the cost of food at the store? Yes. Could people then buy as much house or as much stuff to fill their closet? No. But what's more important in life? What constitutes a standard of living... having more "stuff" or getting sick? I can hear it now... people would argue that such a tax would be "regressive", because it would "hurt" the poorest folks the most (you know, the ones that are dying the fastest from these very foods). Besides, this isn't a nanny state kind of thing. I grew up in a house where certain things were provided free (by my parents). If I "wanted" something, I was free to buy it... with my own money. Unfortunately, much of the external costs of processed foods high in sugar are being provided by our parents (or more precisely, our Uncle Sam). Why can't our Uncle refuse to pay for these costs and just say: "listen up kids, I provide a lot of basic services... but paying for the avoidable consequences of your high sugar and low fiber diet isn't one of them". Right on, Eric ! Healthy Eating is the most popular theme of the books we publish. May I suggest reading a book we don't publish: Blue Zones by Dan Buetner. It's about the healthiest and longest lived communities of people in the world: what they eat, and don't eat, and how they live and exercise. You might also find interesting: Nudge! by Richard Thaler and Cass Sunstein. It's about how to preserve the choices of free markets but still nudge people through public and private policy to do the "right" or most beneficial thing. :) You may also find The Omega Three Connection by Andrew Stoll to be interesting. I heard him speak at an autism conference in San Diego a few years ago. He's a Harvard Medical school prof who's had great success treating manic depressive patients with N-3 fatty acids. (N refers to the terminal or "omega" end of the fatty acid molecule). It seems that many people with other or less severe types of depression also benefit from N-3 fatty acids. Interestingly, the people from Japan and NZ have much in common, but their diets are different. Japanese have much more omega 3 on their diet, and they have one tenth the rate of major depression of New Zealanders.

Great post, valuecfa. How are the Build America bonds trading now? Have their yields gone up as much as munis?

All the headwinds mentioned are real, but there is a more fundamental issue that clouds their future as far as the eye can see: they aren't a low cost/high quality operation, and they will be competing increasingly with the WalMarts and Publics in Supermarketland.

The way WEB approaches a long term investment in non controlling stock of a company and the way most other value investors approach an investment is quite different. WEB looks at Integrity of management and key ratios like ROC, profit margin, etc as do others. He also puts a high weight on true owner's earnings, past, present and future, as far as can be seen. However, what separates WEB's approach from others is the Attention paid to the length of the long term track record of the company and the industry regarding the same ratios. The longer the track record of extraordinary returns, the better. A recent secular improving trend in a long term record is also a big plus as for example with his purchase of Burlington Northern and Santa Fe. Many value investors have profited by giving a high weight to Graham's PE 10 ratio. WEB also looks at PE 10 and other ratios for ten years, but he goes far beyond that to see how the competitive position has changed over time. He will look at ratios going back as much as 100 years to see how these have changed over time before making his largest investments .

The cover page is a mock zombie movie poster: "Night of the Living Fed" That's one of his very best letters. :)

I just bought an option that could double my avoirdupois. Supersize me! ;D