StubbleJumper

Hmmm... I was just rooting around in my bookcase last night and I happened to see an ORH annual report. It never even occurred to me to list it on EBay. All of this time I thought that I was a tight-wad bastard, but compared to Lotsofcoke, I'm just a rookie! ;D

Actually, from Rochester you might even consider seeing a game in Montreal. The stadium in Montreal holds about 24,000 people and it's usually packed, so it makes for a great ambiance to watch a game (even if most of the people are cheering for the Alouettes :( ). And there are lots of cool things to do in montreal before and after the game. In Toronto, the stadium holds about 48,000 and it's usually less than half full for football...getting a ticket is dead-easy, but a half-full stadium kinda sucks. People in Hamilton are going to hate me for not recommending their city!

You can listen to the Rider games on CKRM radio at: http://www.620ckrm.com/sportscage-home One thing that you need to be careful about when planning to listen to the games on CKRM is that Saskatchewan does not use daylight savings time, so if the game is at 1pm in Saskatchewan, it's 3pm in New York....but when the playoffs begin in the fall, it would be 2pm. It's a bit complicated. If you want to see a game, I'd actually suggest going to Toronto. There are tonnes of things to do in Toronto other than the CFL game, so you can make a nice little weekend out of it. SJ

This morning ELF.to announced that they will sell their P&C arm to Travellers for CDN$1.1 billion. This will apparently be a cash transaction closing in Q4 2013. So, my question is what will the company do with $1.1B? It is already majority owned by the Jackman family...so will the cash simply be used to take the company private? And at what price would this reasonably occur? Just navel gazing... SJ

I love it. People who are normally well-balanced and intelligent become complete irrational fools when it comes to their family pet and spend inordinate amounts of money on vet services, grooming, food and toys. If C&F can find some way of convincing these excessively emotional people this price-insensitive market segment that they very badly need pet insurance, there could be very good profits... SJ

Wow! That's a quick way to cause capital markets to completely cease functioning. Who the hell would ever save and invest in Cyprus after this overt expropriation of wealth? Better to get your money out of the country or even put it under your mattress! They have effed themselves!

The only difference is that the Government of Ireland actually took measures to fix the country's problems, while the Greeks seem to be more interested in denying/delaying. Buying into temporary disorder is potentially interesting, but buying into perpetual chaos? Not sure this is the best idea! SJ Greece is certainly not as strong as Ireland. Still this is interesting to study. I remember in 2012 Q4 letter, Dan Leob also pointed out that they bought a ton of Greece national debt and feels bullish about Greece's future. Ireland wasn't as strong as Ireland two years ago. There are preferred shares NBG.pr.a that trade in the US. The dividend is non- cumulative, and suspended. I am going to look at the prospectus when I am flying in two weeks to see if they can issue new prefs before they re-instate the dividend on existing issues. They have also been tendering for prefs that are cumulative. I did very well on RBS preferreds. IMO, it's not really about whether Ireland was in better shape 2 years ago than Greece is now. Rather, it's a cultural thing about whether a country has a propensity to have an adult conversation to acknowledge the situation that it's in, identify practical solutions, and then accept the bad tasting medicine. Canada did it 15 years ago. Ireland did it. The United Kingdom is doing it. I have faith that the Americans will eventually have that adult conversation and make adult decisions. All of them are primarily anglophone, advanced economies. On the other hand, I am completely unconvinced that the southern european countries are able to actually have that adult conversation and actually take the bad tasting medicine. I hear ridiculous denial from people when I travel to France. In Spain, I wander around in disbelief about how things are run...or are not run. The Greeks that I have spoken to point the finger at the Germans for their problems. All of this is unbelievable. Maybe I have mis-assessed our southern European friends, but I just don't think that they have the collective emotional maturity to take the bad tasting medicine. Sorry to all those whom I've offended. SJ

The only difference is that the Government of Ireland actually took measures to fix the country's problems, while the Greeks seem to be more interested in denying/delaying. Buying into temporary disorder is potentially interesting, but buying into perpetual chaos? Not sure this is the best idea! SJ

Falcon has been a gem forever. Just as C&F has been a disappointment since its acquisition. Some things never change. However, you are correct that we shouldn't take Fairfax Asia for granted.

We are selling because we like to make money, and we are up a lot of money. On the AIG's almost 100% on the average purchase price. On BAC we will end up making more than 100% (probably 130% when its all said and done). For a hedge fund these are fabulous annualized numbers why mess with them. A bird in the hand.. Moore, Maybe you covered this already, but I'll ask anyway... Have you considered simply hedging your exposure by purchasing a bunch of SPY put expiring in Dec 2015? The options would cost you about 15% of your portfolio value, but then you could happily invest for the next 32 or 33 months unworried about a drastic decline in the broad market. Personally, I wonder whether you have not exited from BAC and AIG prematurely. Presumably those two positions will easily provide a sufficient return to pay for a SPY put if markets do turn out to be favourable. In the other hand, if markets turn out to be unfavourable, presumably BAC will be fine, but I don't know about Chartis....and in any case you would have some degree of protection by virtue of your index puts. It's a real son of a gun to correctly time macro events...as long as there's undervalued big caps out there, personally, I'm really hesitant to convert any more of my portfolio to cash. SJ

Like, "Hey babe, let's go for a BRK out BAC...I've got some POT?" I've never tried it, but there's always a first time...

I'm quoting myself because I still think the above. If you're going to forecast weekly / monthly stock price movements, yikes. I agree 100%. I wish people would just put it back in their pants...I really don't care how big it is.

Why is this an "ouch?" Moore's Law seems to be alive and well in the storage arena. The way for hard drives to not be replaced by something else like SSD is to get cheaper and larger. As somebody who has lived the entire transition from 10 MB drives to the enormous beasts out there today, I find the whole process to be fascinating and uplifting.

There was an article in today's Globe and Mail about the potential acquisition of Safeway Canada for up to $5.5B, which is about the same as the entire market cap of SWY...

Prem allowed FFH to hold a $90m investment in an airline? He has always struck me as a fellow with a strong understanding of the history of financial markets and on the economics of the various sub-industries, so the original purchase of airline shares seems counter-intuitive. SJ

Well, IMO, it's not just annual reports and shareholder letters from companies that are interesting. I also like to read letters from managers like Van Hoisington and Francis Chou. During a 10-minute read of those letters you can glean some great nuggets of insight. SJ

Taking GMO's projections literally, yes absolutely cash and/or bonds are inferior to stocks. However, what their projections don't account for is the highly valuable "optionality" cash provides in a down market. Stating the obvious, even if you lose 2% real per annum over the next three years, one will more than make up for the loss in purchasing power by buying stocks at levels more commensurate with long-run averages. You are assuming that the overvaluation (~30% overvalued) will resolve itself through a relatively quick draw-down in equity prices. However, there are any number possible ways that overvaluation can work itself out that do not result in an opportunity to buy back in: 1) Market trades more or less sideways for about 6 years, then we're pretty much at "fair value." 2) Market goes up 15% in 2013 and then trades sideways from 2014 through 2021, then we're pretty much at fair value. 3) Market goes down 5% during 2013 but you don't buy back in because it's still overvalued, and then it trades sideways for 4 years. 4) Market goes up by 2% per year for 10 years and finishes at roughly fair value. 5) et cetera...you are only limited by your imagination. All that to say that cash has optionality, but the option might finish out of the money. For me, I'm holding securities that I believe are absolutely cheap irrespective of the level at which the S&P500 trades. SJ

I'm about 110 percent long, with the leverage coming from BAC warrants. Despite the run-up, I'm having a great deal of difficulty convincing myself to part with ANY of my exposure to BAC. For those who have dumped some warrants in recent weeks, at what level do you expect BAC to trade in January 2019 when the warrants expire? I am having trouble inventing any plausible scenario where BAC shares are worth less than $30 in 2019, meaning the warrants still look like a three-bagger over 6 years. It's not Cardboard's 99% return, but I'm happy with the notion of three bags in 6 years. I also have a great deal of difficulty convincing myself to dump any FFH at current prices. I just can't do it, the future looks too good! Strangely enough, following the run-up of BRK, I'm beginning to think about trimming the position, but it's been so far from IV for so many years that the idea of selling strikes me as a knee-jerk reaction to a nice run-up that has taken us part of the way to IV. Nope, I think I'll just keep looking for cheap stuff and not fuss about DJIA 14000.

That's even worse! Your basic costs to keep a room cleaned, linens changed, new plastic cups, fresh little soaps and shampoos, etc will run you a minimum of $15-20/night even with a crappy hotel in a rural area. The margins totally suck and you are still running at only half occupancy. The only way to make this work well is the Patel way! The whole damned family needs to work long hours and not take a real salary.... Since you want to work 2 days per month, you are a far cry from a Patel! (but there's no shame in that either). SJ

Depends. If you have good management in place, then yes, it could operate quite well with you only on site some of the time. At the same time, being on site only on occasion, also opens you up to considerable fraud or theft if you are incorrect in your judgement. Not to mention your hotel's reputation for service, cleanliness, friendliness, occupancy and execution. I have a friend who owns a hotel about five hours from Vancouver. He lives in North Vancouver, but he is on site usually for two weeks of the month, even though he has good management in place. He has to be there and much of the administrative and book-keeping work is done on site, so it occupys a considerable portion of his life. He has a wife and two young children as well, so he's a very, very busy guy. You should also consider what competition is around you as far as the hotel is concerned. My friend's hotel is really the only hotel on the lake in the immediate area, and he owns the largest marina there, which is attached to his hotel property. So, his hotel has certain amenities that the competition cannot provide, since that zoning is not available in the future for any other properties near his hotel. Cheers! Thank you for the advice parsad. I'm thinking 2 days to manage the hotel isnt realistic. I have some choices to make if i want to do the deal. I've been interested in hotels for some time and a big obstacle seems to be making the jump from owning one or two hotels and being there all the time, to creating a larger chain and having other people run it mostly. As Parsad says, getting quality and trustworthy management is key. Just out of curiosity premfan, how big is the hotel you're looking at? I always find it interesting to think about the numbers... The gross revenue is in the low 500,00k Its on the market for 2x gross revenue It nets between 120-140k The guy runs a really lean hotel so i'm thinking i cant add any value there. The things i add some value to is there is a vacant bar/resturant space in the hotel. I can lease that and make some additional income. The hotel needs some work though. So 20-25 percent of net income would go to improvement of the property. This leaves me with about 100k cash flow. Its looking like the property will go in the mid 900k's. 60 plus units. PS. I have noticed hotel prices have gone down since 2009. It hasnt reached a bottom yet Is it just me, or does this sound like a basket-case? Annual Gross revenue of $500k/365 days per year = $1,370 per night. Nightly gross of $1,370/$100 nightly room charge = 13.7 rooms occupied per night Nightly Occupancy of 13.7/60 units = 22.8% average occupancy rate? What doesn't add up here?

Okay, so Francis is technically no longer working for FFH, but he has historically been a tremendously important contributor to the company's success: http://www.theglobeandmail.com/report-on-business/rob-magazine/francis-chou-look-for-a-good-deep-value-fund/article7805229/

One of the fixed income sites that I like to use is : www.quantumonline.com The TRuPs section only has like a 2 paragraph primer, but it has a nice list of the major TRuPs that are available, their credit rating, dividend, redemption/retraction/exchange rules, etc. Hope that helps a bit, SJ

I personally wouldn't get too excited yet. I haven't followed the RIM story (or the RIM thread on this board) much, but does any of this price-action matter before it becomes clear whether the BB10 will sink or swim? As a distant observer, that seems to be make or break for the company. I guess it also depends on what the patents etc could reasonable be sold for (floor worst-case liquidation situation), which I have no clue. The performance of RIM is certainly debatable, as you suggested. But to me the bigger issue is that FFH does not have a viable exit strategy. Now that Prem is a RIM board member, he will be hard pressed to dump RIM shares, even if they approach a price that is near FFH's evaluation of intrinsic value. After all, what does it say about his commitment to the company if he dumps his (our!) position? If you can't sell, and they don't pay a dividend....

So, in other words, pay out $200m in divvies at the end of January, and then borrow $250m more? I don't get it...

Yeah, the Malthusian view of eventual exhaustion of food and energy pretty much ignores the last 10,000 years of history! I was disappointed that GMO published that, as it's the normal pop-media garbage rather than thoughtful reflection.