StubbleJumper

I hope it's not for an acquisition, with the market being what it is. But they have found some obscure international insurance companies over the past few years that actually added up to big bucks. What I hope they do with it is to use the proceeds to repay/buy-back some of that large slug of debt that comes due in 2021. We're four years away from that event, but Prem has become very cautious about cash management after some of the challenges that they faced 13 or 14 years ago... SJ

Hmmm. That might be a bit of a confirmation bias. How about the following obvious, excellent opportunities for which professional expertise would have triggered a massive buy signal: Research in Motion in 2007 Countrywide Home Loans in 2004 AIG in 2004 Motorola in 2003 Not saying that professional expertise is worthless, only that I know lots of very smart engineers who lost scads of money by investing in their area of expertise. I explicitly said that this is from Monday morning quarterbacking standpoint. So yeah, it's obviously biased by post-factum analysis. However, I can say without any bias that Motorola in 2003 or RIMM in 2007 would not have been no-brainers to me. I knew about them and I did not invest in them. In fact, for me both of them were pretty clearly uninvestable at that time. I have no opinion about AIG or Countrywide Home Loans. I have no clue why you would even consider them to be "in-profession" for engineers. ::) Yeah, I included AIG and Countrywide for diversity, not because the engineers that I know lost money from them. In fact, the engineers that I know lost the most money on things like NT, JDS, or NN. They had groundbreaking technology, rapidly growing sales and actual net income. And then the bottom fell out. While there's nothing new about that story, it's just an observation that successfully applying professional knowledge ex ante, is a great deal more challenging than identifying the winners ex post!

Hmmm. That might be a bit of a confirmation bias. How about the following obvious, excellent opportunities for which professional expertise would have triggered a massive buy signal: Research in Motion in 2007 Countrywide Home Loans in 2004 AIG in 2004 Motorola in 2003 Not saying that professional expertise is worthless, only that I know lots of very smart engineers who lost scads of money by investing in their area of expertise.

Previously I had 55% WFC 25% BAC and 20% AXP and I sold away my BAC.. I take comfort in the fact that I have an income which will probably add 10-20% extra cash to the portfolio each year. Certainly if I did not have a job, I would diversify more but don't think I'll go beyond 5-8 stocks. I feel that I know those stocks well enough to understand they're a low risk bet. If there is a decent probability of a stock having a permanent impairment of capital, I feel it makes sense to not even invest, rather than buy a lot of them to diversify. Don't you think you overestimate your own ability to determine the risk of permanent impairment of capital? To be honest I think all your holdings have such a risk as all of their businesses would be significantly impacted by a major event in the financial markets (e.g. a major currency blow up, bank runs, large systematic defaults, a black swan such as exponential cryptocurrency adoption). These events have a non-zero chance of occuring. On top of this all your holdings are vulnerable to the same sort of event! Okay, I'll play along (because I too am unwisely concentrated). If a systemic event adversely affected WFC, BAC and AXP to the point that there were a meaningful permanent loss of capital, what else would likely be occurring in the broader economy and society? I fully concur that there are a number of systemic events that could take out all three companies, but I would assert that it would likely be accompanied by a debauching of the currency and general collapse of the economy, for which gold bullion, canned food and adequate ammunition supplies are the only realistic hedge. Food for thought. SJ

Yes, this can't be negotiated. Both families are here. We like being around our extended family. Keep in mind that I don't live in Manhattan. I live in Forest Hills, NY. There actually is a forest out here about 1.5 miles away. At times, I would go on my walking trip which would total 6-7 miles and take 2 hours. It does wonders to clear my mind and help me catch up on conference call and what not. There are time when i just want to think and contemplate. Forest Hills truly is the best place in NYC if you want to be a start up manager. It's a 20 min subway ride into Manhattan, you're near a forest, an university library, an expressways that can get you access to Long Island and the suburbs. I do own a car. Can you suggest a few places in the Adirondacks that I can Airbnb? I've thought about a getaway weekends for myself for a couple people that I respect to just get away and think deeply and strategically. I am a hiker, so I spend a fair bit of time in the High Peaks. So, if you like quaint towns, that could include Lake Placid or Saranac Lake. If you like to be a little farther from civilization, then there are places like Tupper Lake or Long Lake. From all of those locations, you can access some gnarly hiking or some serious solitude, depending on your preference.

The categories are not mutually exclusive, nor jointly exhaustive. How can one vote intelligently? It is completely reasonable to believe that 1) the Canadian economy will grow over the next five years AND 3) the Canadian dollar will weaken vis-à-vis the US currency AND 5) that there are better government services in Canada compared to the US.

Are you limited to living/working only in NYC? It strikes me that you could probably buy a nice little house up state for a modest cost and downsize your footprint in NYC. In fact, the Adirondacks are beautiful and quiet, and there's a train going regularly from Albany or Schenectady to Penn Station...

They pay out insurance indemnities to their policy holders with the $10b of cash. The potential uses of that cash are somewhat limited...basically most of it needs to be invested in some form of sovereign debt, state/provincial debt, or munis. I guess a little bit could be directed to corporate bonds or equities, but I'd be surprised if Prem were to reach for yield in the one case or increase his equity allocation in the other case.

The problem is that this has been true for a long time and for whatever reason, Bauer has just never worked out for anyone. Hockey is growing, especially in the US. The margins shouldn't be terrible. Yet with Bauer, my outside perspective is that they've made too many poor acquisitions that weren't really necessary and if anything diminished their brand. Nike couldn't even make them work. Immigrants don't tend to enrol their kids in hockey. Boomers are going to stop playing soon. It's a shitty business. Rogers was foolish to pay $5.2 billion for the hockey tv rights. There will be a big TV market for a very long time, but that's entirely separate from how many people actually will be playing the sport over the coming decade (just as there's a huge football audience and NASCAR audience, despite the fact that there are virtually zero recreational football leagues or car racing leagues). Whether $5.2B was a good price or a terrible price, is impossible to say.

The problem is that this has been true for a long time and for whatever reason, Bauer has just never worked out for anyone. Hockey is growing, especially in the US. The margins shouldn't be terrible. Yet with Bauer, my outside perspective is that they've made too many poor acquisitions that weren't really necessary and if anything diminished their brand. Nike couldn't even make them work. Immigrants don't tend to enrol their kids in hockey. Boomers are going to stop playing soon. It's a shitty business.

Is there a reason why you seem to be restricting your options to universities in Europe? There are many good schools in the US and some good schools in Canada. Beyond getting a basic degree, what are your objectives for the next four years? Here are a few possible examples: -I would like to obtain as much cross-cultural experience as possible, therefore I seek a school in a multicultural society -At the end of four years, I would like to speak English perfectly and drop whatever latent Israeli accent that I might have -During my degree I would like to meet a woman to marry (this is what many of us do as universities are full of single women!!!)...and I place a low/medium/high importance on my potential wife (or husband) being some variety of Jewish -I would possibly consider emigrating from Israel to the US/Canada/Europe for my career and then go back and retire in Israel -I don't care (or I do care) about being able to spend every little holiday with my family, and I don't care if I ever get back home for an afternoon of football followed by Sunday supper I am a big proponent of studying in the US or Canada as young foreigners complete their degree and might have the opportunity to immigrate. At worst, they'll speak English with a perfect North American accent.... SJ

Yes, I made plenty of money from Brolga's efforts, so I've built a little shrine in my basement to worship him! But lots of coke and cardboard are probably more deserving of my shrine...

Read their 10-k about the NOL. I think they mentioned some IRS rules about ownership change that can lose the NOL. That's why they approved unlimited preferred stocks, in order to raise money and realize this NOL without either diluting existing shareholders or losing this NOL. However, they have only been able to issue $6.6 million preferred so far, and it is convertible preferred. Okay, so no takeover...unless a reverse-takeover would work?

I must confess that I haven't spent 5 minutes thinking about Kingsway since Bill Starr ran it into the ground. What a shameful performance that was. But the $849m NOLs is interesting. If they can convince people that their problems are over and that there are no skeletons in the closet, then is it possible some profitable insurer might be interested in buying Kingsway simply to obtain the NOLs? If BV=$42m, a multiple of BV (say 2x or 3x) could be paid and the purchaser would get all of that back in tax savings within a few short years? Interesting. SJ

St. Hubert is one of the best low-cost places to take a family for supper. As long as Cara doesn't screw up by trying to integrate the St Hubert supply chain with Swiss Chalet, it'll all be good. Swiss Chalet is okay, but St Hubert rocks. SJ

Oh Christ. It's Dragon's Den with shareholders' money....

Are we still talking about cash? ::)

Well, first off, why do we hold cash? Unless you are in the withdrawal phase of your investing life-cycle, I would argue that we hold cash because we are awaiting market opportunities to deploy it in an interesting investment. I'd say that there are two broad situations where market opportunities might appear: 1) A security (or perhaps a collection of securities) fall in price and become attractive; or 2) A general market displacement occurs which drags down the price of most (all?) securities. Most of my investing career I have been snooping around looking for opportunities from cause #1, but on a couple of occasions (the tech wreck and the financial crisis) I exploited opportunities from cause #2. If you want to exploit only opportunities in cause #1, you can keep your cash in pretty much any security and you won't run into trouble. But if you think that cause #2 is possible/imminent, then you need to avoid any risky security, all money market funds, and all commercial paper. What we learned in 2008 is that during a financial crisis, prices of risky securities can decline for no reason, money market funds prohibit withdrawals, and that you might not be able to convert commercial paper to cash. So, I say if you are planning to keep cash around to deploy it opportunistically, you should be looking for two characteristics: 1) LIQUID 2) SOVEREIGN GUARANTEE An insured savings account or T-bills fulfil these exigencies nicely. Reaching for yield can finish badly. SJ

Francis Chou has killed the S&P over 15 years, but he hasn't done quite so well over shorter periods...

Or perhaps he simply prefers to have a few cash sales because there's no traceable documentation which could trip him up when he fails to report the revenue from that job to the IRS. It's a nice little boon to his financial situation to charge you $5k to do your roof, not report the revenue and then apply the $3k of costs (for which he will certainly have documentation) against the revenue that he must declare from the clients who do pay him by cheque. But at least the explanation that he provided to you is less sleazy than the simpler alternative.

I haven't noticed it too much for durables because I don't purchase them very often. But I've really noticed it when I travel to the US. In 2012, when the dollar was at par, I would go to a pub in the US and a burger and fries might be ~$8 and a pint would be perhaps ~$5, for a total bill of ~$13 plus tip. Compared to the same meal in Canada it was a reasonably good deal because both the burger and the beer would each be at least $1 more for a base cost of $15, and then you tack on the GST/HST and you'd be at $17+tip. Now in 2016 the US burger and beer are ~$13x1.4 + tip. Suddenly a lunch in the US actually costs a shade more than in Canada! It's the same thing for hotel rooms. An okay 3-star or 4-star room in the US might have cost $150 back in 2012 when the dollar was at parity, but now that very same hotel room in 2016 costs $210 Canadian dollars. Hanging out in the US has gone from being slightly cheaper than staying in Canada in 2012 to being considerably more expensive! I typically spend 30 or 40 nights in the US each year for personal reasons, so I might need to re-think that if the exchange rate keeps dropping... SJ

BRK. It's not quite the no-brainer that it was when TWACOWFCA flagged it a couple of years ago as the mother of easy trades, but the valuation is still quite compelling.

Haven't looked at the exact magnitude of Canadian denominated assets vs debt, but my sense is that the impact on Northbridge, Cara and other Canadian assets will pretty much offset the preferreds and debt. But it's a good reminder that we need to evaluate Northbridge's performance in the context of the currency valuation. Over the past couple of years, when reading the financials I would occasionally be disappointed in the lack of YoY growth in Gross Written at NB, but then after reflecting on currency depreciation, I was much less disappointed. SJ

Ownership itself is an adequate stake which ensures that management's interests are reasonably well aligned with other shareholders. The lifestyle needs of a half-dozen people in the C-suite hardly justifies the resulting capital management decisions.

Cdns receive the divvy in US dollars. If the shares are held in an account denominated in Canadian dollars, the divvy is automatically converted (at the typical outrageous brokerage exchange rate). Better for us to simply hold FFH in a US denominated account and either re-invest the US dollars into something else or convert them using Norbert's Gambit. SJ