StubbleJumper

Interesting. They seem to have bought some USG. It's definitely cheap compared to peak earnings, or top-of-cycle earnings, but how long will it take to get the volumes back? So, they're hedging equities, and have taken a deflation-biased stance, but they bought USG? Strange. SJ

Hmmm... MSFT share price is down ~2% over the past day or so, which would equate to ~$4B of market cap. IMO, that's a pretty harsh message from the market when you announce a $8B acquisition that your market cap drops $4B. SJ

Yep, a 7% real return, after income tax. You would need to earn ~11% from a taxable account to get an equivalent return. The stock market does not return 7% real, but Siegel's work would suggest that it might return around 6.5% in real terms. With such a small difference in expected returns, the only meaningful advantages that housing offers is the ability to easily leverage returns and the income tax aspect. I bought my house at a cap rate of about 7.5%, and it's been a good deal so far! SJ

There's no homework to do. I simply observed your behaviour and offered the only rational motivation that I could imagine for deleting threads. There really should be no reason to be uncomfortable with the material in those posts, as a fair observer should be able to read the entire series of posts and arrive at his own conclusions about whether other posters were impugning your character. Your good name is either maintained or lost through your own behaviour. People will arrive at their own conclusions. SJ

It's not the first thread that he has deleted after board members have crapped on his thesis. He deleted the Vermont water bottler thread about 6 or 8 weeks ago. The strange thing is that both the gambling thread and the bottled water thread involved board members helping Harry finalize his research. In particular, the gambling thread had several smart cats contributing their time and expertise to help him out. There's no real reason to be ashamed of that. SJ

+1 It's helpful if people are rigourous about confining discussions to particular threads so that it's easy to skim over the areas that are not of interest. In that context, I am a little surprised about the comments about LVLT from some users. Whether you believe that the LVLT discussion is fabulous or inane, it is nicely confined to a particular area which makes it either easy to find or easy to avoid. It is also easy to simply ignore a particular user if that's what you deem to be appropriate. I do not tend to do that because it's helpful to use the behaviour of even the worst ignoramus as a reminder of how not to conduct myself and how personality flaws can be harmful to making sound investment decisions. IMO, Sanj has generally done a very good job of turfing the few incorrigibly disruptive personalities and ensuring that discussions do not deteriorate in a counterproductive manner. SJ

Wow, 5.75% is a smoking good rate!

The notes that they floated last year were 7.25%. The re-purchases will not offer any meaningful interest savings once you take into account the re-purchase premium, and the offering costs for the new notes. IMO, the $180m that's due next year is not very burdensome, just pay it off...and there's no real rush to re-finance debt that's not due until 2015 or 2017. At least it's better than the years when they re-purchased common shares and then had a common share issuance in the same year. I think you might be right about Prem getting positioned for yet another acquisition. That's about the only explanation that makes sense. SJ

Ok, fine. Just as long as they don't turn around with a $500m note offering or a $500m preferred offering two or three months down the road... They are very active on capital management, sometimes with seemingly offsetting measures in the same year. It's always struck me as being a little trigger-happy. SJ

Brings up issues about diversification and potential of permanent loss of capital. Can't go with FFH for that reason. Probably have to choose something like KO for a 100% allocation over 5 years. SJ

Chalk that up to yet another error of omission for me.... SJ

Not sure that I quite understand today's price action. Down $10 at the bell, that makes perfect sense, but it reverses and is up $1 at lunch? BTW, thinking back to spring windstorms circa 2004 or 2005, the windstorms in tornado alley over the past couple of days could have a 9-digit impact on FFH.... Probably won't find out until August. SJ

Nope, I've received plenty of help from a great many thoughtful and humble people, and for that I am very grateful. But there is a difference between dogmatic arrogance and thoughtful advice.

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices? Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated: Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives? Your statement excluded any reference to the market price of the security. I kinda think it's an important factor. So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment. If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price. Regards, SJ No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet! Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is. Try to engage in evidence based reasoning. I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money. I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me. In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people. Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread? There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer. Why such a visceral reaction to a couple of very indisputable points? In CNA you found one example of a real dog with chronic adverse development that sells for well below book. If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA. However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps. In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years. The other observation that I would make is that you never really know how long it might take for an investment to work out. You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1. You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50. Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous. WRT Netflix, you were NOT far too diplomatic. You made your point. People understood your point. Some of them just happened to disagree with you, which is their prerogative. They are adults and they made their decisions. It would not have helped anybody if you had elected to be more obnoxious in making your point. SJ Where do I begin? I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance. II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK. III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit? IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic. Let's be honest. You have a hard time hearing that you're wrong. Rather than focusing on correcting you mistakes, you would rather focus on the lack of diplomacy in the person helping you. In my business, that's called avoidance. Well, Harry, I would suggest that you could have begun by calmly reading the thread before constructing a reply. This is my last post on this increasingly vapid thread. A few observations: I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance. Ok, sheesh, now we're back to denying that the market price at which you buy a security has an impact on the ultimate return that you will realise? Come on, Harry! II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK. ;D Harry, I would remind you that you used these words which did not speak of a "poor" underwriter: "Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?" III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing ;) Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit? Yes, your timing was fabulous, congratulations again. Systemic methods for entry and exit do not guarantee an immediate favourable outcome, but certainly the thought process is helpful to be in a position where such an outcome might occur. IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic. Altruism is an interesting thing. We all get something out of everything we do, even if we don't/can't articulate what it is. Reflect on that, and think about what you get out of posting on this forum and how that might colour your posts. In the end, we will just have to disagree that the purchase price is a key consideration when evaluating P&C insurers. I will stick to what I do, and you can go ahead and buy securities without looking at the price tag. :-* Not looking at the price tag...that must have been what I was doing when I found SURW, perhaps the cheapest telco in the country at the time, and perhaps the cheapest stock in the U.S., when I first wrote multiple articles on it, brought it to the board's attention, did 2 youtube videos on it..... It's amazing that you would mischaracterize my record in such a fundamentally disingenuous way. When I post, I do so under my own name and my record is clear. I stand behind it. You may say ridiculous things, but you do it from behind the veil of anonymity. Think about that when you deliberately mischaracterize someone who has merely had the timerity to share great ideas with you and to clarify for you the proper way to go about evaluating insurers. You are addicted to misquoting me. As I've said before: "In addition, when it comes to valuation, as I have said many, many times before, the true book value is often under-stated due to reserving, whereas weak underwriters often under-reserve. Ironically, the poor underwriter, or middling underwriter appears cheaper on a P/B basis, but often it is the company which appears more expensive on a P/B basis which is actually cheaper after making adjustments for over-reserving." Quality is fundamentally related to true valuation! I say it again and again, but you purposely come away with the opposite conclusion and attempt to mis-represent my views. Just think of how far you could go if you put as much effort into learning! 1) Mischaracterize your record? I made absolutely no reference to your record. 2) Go ahead an post under whichever name suits you. The internet is a big place with all kinds of people, so some of us prefer to be a little more cautious with personal information. But to each his own. 3) You apparently have found the single most appropriate way to evaluate insurance companies. Congratulations! Wonder what Bertrand Russell would have said about such a view! 4) Don't pull quotes out of other threads and youtube videos out of cyberspace and act indignant that they have not been taken into account in this particular thread. Like seriously, get a grip! 5) Nobody ever said quality wasn't a factor in evaluating an insurance company. As I have suggested in previous posts, go back and calmly read THIS thread, and you'll see that I was very clear that underwriting, investing prowess AND PRICE are all important elements. On this issue, it is clear we do not seem to agree. 6) If you would cease your arrogant attempts to be the sole authoritative fount of knowledge, you too might become a better investor. Serious delusions of grandeur! We're not worthy! SJ

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices? Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated: Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives? Your statement excluded any reference to the market price of the security. I kinda think it's an important factor. So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment. If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price. Regards, SJ No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet! Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is. Try to engage in evidence based reasoning. I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money. I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me. In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people. Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread? There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer. Why such a visceral reaction to a couple of very indisputable points? In CNA you found one example of a real dog with chronic adverse development that sells for well below book. If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA. However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps. In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years. The other observation that I would make is that you never really know how long it might take for an investment to work out. You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1. You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50. Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous. WRT Netflix, you were NOT far too diplomatic. You made your point. People understood your point. Some of them just happened to disagree with you, which is their prerogative. They are adults and they made their decisions. It would not have helped anybody if you had elected to be more obnoxious in making your point. SJ Where do I begin? I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance. II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK. III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit? IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic. Let's be honest. You have a hard time hearing that you're wrong. Rather than focusing on correcting you mistakes, you would rather focus on the lack of diplomacy in the person helping you. In my business, that's called avoidance. Well, Harry, I would suggest that you could have begun by calmly reading the thread before constructing a reply. This is my last post on this increasingly vapid thread. A few observations: I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance. Ok, sheesh, now we're back to denying that the market price at which you buy a security has an impact on the ultimate return that you will realise? Come on, Harry! II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK. ;D Harry, I would remind you that you used these words which did not speak of a "poor" underwriter: "Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?" III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing ;) Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit? Yes, your timing was fabulous, congratulations again. Systemic methods for entry and exit do not guarantee an immediate favourable outcome, but certainly the thought process is helpful to be in a position where such an outcome might occur. IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic. Altruism is an interesting thing. We all get something out of everything we do, even if we don't/can't articulate what it is. Reflect on that, and think about what you get out of posting on this forum and how that might colour your posts. In the end, we will just have to disagree that the purchase price is a key consideration when evaluating P&C insurers. I will stick to what I do, and you can go ahead and buy securities without looking at the price tag. :-* This is what happens when you try to help people. Confirmation bias at work. You have a right to refuse to learn, but you don't have a right to misquote me. As I've said before, I do look at the price of the goods--after I inspect their quality. It's over-paying to pay even 1 cent for a rotten apple. Learn and prosper my friend. Point of personal privilege, I quoted you precisely. You would do well to read the entire thread calmly.

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices? Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated: Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives? Your statement excluded any reference to the market price of the security. I kinda think it's an important factor. So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment. If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price. Regards, SJ No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet! Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is. Try to engage in evidence based reasoning. I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money. I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me. In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people. Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread? There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer. Why such a visceral reaction to a couple of very indisputable points? In CNA you found one example of a real dog with chronic adverse development that sells for well below book. If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA. However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps. In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years. The other observation that I would make is that you never really know how long it might take for an investment to work out. You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1. You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50. Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous. WRT Netflix, you were NOT far too diplomatic. You made your point. People understood your point. Some of them just happened to disagree with you, which is their prerogative. They are adults and they made their decisions. It would not have helped anybody if you had elected to be more obnoxious in making your point. SJ Where do I begin? I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance. II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK. III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit? IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic. Let's be honest. You have a hard time hearing that you're wrong. Rather than focusing on correcting you mistakes, you would rather focus on the lack of diplomacy in the person helping you. In my business, that's called avoidance. Well, Harry, I would suggest that you could have begun by calmly reading the thread before constructing a reply. This is my last post on this increasingly vapid thread. A few observations: I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance. Ok, sheesh, now we're back to denying that the market price at which you buy a security has an impact on the ultimate return that you will realise? Come on, Harry! II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK. ;D Harry, I would remind you that you used these words which did not speak of a "poor" underwriter: "Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?" III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing ;) Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit? Yes, your timing was fabulous, congratulations again. Systemic methods for entry and exit do not guarantee an immediate favourable outcome, but certainly the thought process is helpful to be in a position where such an outcome might occur. IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic. Altruism is an interesting thing. We all get something out of everything we do, even if we don't/can't articulate what it is. Reflect on that, and think about what you get out of posting on this forum and how that might colour your posts. In the end, we will just have to disagree that the purchase price is a key consideration when evaluating P&C insurers. I will stick to what I do, and you can go ahead and buy securities without looking at the price tag. :-*

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices? Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated: Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives? Your statement excluded any reference to the market price of the security. I kinda think it's an important factor. So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment. If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price. Regards, SJ No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet! Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is. Try to engage in evidence based reasoning. I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money. I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me. In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people. Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread? There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer. Why such a visceral reaction to a couple of very indisputable points? In CNA you found one example of a real dog with chronic adverse development that sells for well below book. If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA. However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps. In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years. The other observation that I would make is that you never really know how long it might take for an investment to work out. You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1. You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50. Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous. WRT Netflix, you were NOT far too diplomatic. You made your point. People understood your point. Some of them just happened to disagree with you, which is their prerogative. They are adults and they made their decisions. It would not have helped anybody if you had elected to be more obnoxious in making your point. SJ

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices? Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated: Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives? Your statement excluded any reference to the market price of the security. I kinda think it's an important factor. So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment. If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price. Regards, SJ It is quite the opposite. Focusing on price is the amateur's mistake when analyzing financial companies. First you focus on quality, then you wait for your entry/a shrewd price. And earlier this year, one didn't need to make any quality/price trade-off. SUR was selling below tangible. If you focus, Stubble, maybe you will gather that I am not so subtly hinting to you that there are currently bargains to be had with fine underwriting. But you're right, maybe I shouldn't think at all and just repeat platitudes like, price is what you pay, value is what you get. How many P&C insurers have you brought to the board's attention which got acquired this year? Do you really think that I am blind to value? Do you really believe that in your heart/mind? Ok, so now you do acknowledge that price matters. That's good. You're a bright guy, Harry, but a little modesty would go a long way. You seem to have a stock, knee-jerk reaction to any view point that fails to concur completely with yours, and have a tendency to lash out at those who don't happen to agree with you. Sometimes you'll be right, and sometimes you'll be wrong in your judgements but at all times you could choose to conduct yourself with dignity. SJ

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices? Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated: Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives? Your statement excluded any reference to the market price of the security. I kinda think it's an important factor. So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment. If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price. Regards, SJ

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV? Price is what you pay, value is what you get. We need to pay attention to both. SJ

Good one! ;D ;D ;D ;D ;D ;D

As I recall, the court stopped them. This thing is a pig. Shoot it now, bury it, and the insurance industry can simply move on.

Well the big lawsuit was for $6b. However, at this point, that's just a gleam in Prem's eye. First FFH has to win. Then they have to defend the thousand appeals that the hedgies will try to launch, and then FFH has to actually collect from the deadbeats. If they actually win and defend all the appeals, maybe, maybe, maybe they'll receive a cheque in 2020 or so.....assuming that these guys still have any visible assets in 2020 (as opposed to offshore money). And, whatever they collect will be discounted by time value of money (ie, what's the value of a billion that you won't receive until 2020?). So IMO, you're left with: $6b X probability of winning the case X probability of winning the appeals X % of award that is collectible / (1 + r)**10 Personally, I attach a value of zero to the lawsuit when I try to value FFH. SJ

How about the "bad will" for ICICI Lombard? ;D

Held on to our shares? I was accumulating during that period and lamented that I had gone out for lunch on the day in 2003 that FFH hit CDN$57. When I got back from lunch and figured out that the world hadn't ended, I managed scrape up the cash to buy 40 or 50 shares at ~CDN$70. Too bad that I didn't have an extra $25,000 laying around!