rszutu604

That's a great list of investors. Don't forget Duncan Ross Associates: http://www.duncanross.com/en/Who-we-are

Buffett said your genes affect your life expectancy more than diet and exercise. He's had some relatives live quite long. Also, his diet isn't as bad as portrayed. This is Buffett's response to a letter a Nutritional Dentist (and BRK shareholder) wrote expressing his concerns over his poor dietary habits: "My diet, though far from standard, is somewhat better than usually portrayed. I have a wonderful doctor who nudges me in your direction every time I see him. All in all, I’ve enjoyed remarkably good health — largely because of genes, of course — but also, I think, because I enjoy life so much every day. " http://www.omaha.com/article/20090823/MONEY/708239979/0/FRONTPAGE

Beerbaron: I was attracted to FTP after reading the prospectus and seeing their pro forma financials. It showed the insurance value of their two paper plants at the time. After doing further research, I had good reason to believe their property was significantly understated on the balance sheet. Also the stock was trading at a ridiculously low EV/EBITDA multiple relative to similar companies (less than 3x at one point). This analysis was prior to the announcement of the Thurso mill acquisition - which was a bonus and not factored into my intrinsic value estimates. CHCG was a bone headed move. I bought it at a slight discount to net cash and thought I was getting a free call option on the reformed consumer electronics retail business. The company also bought a profitable logistics business that minimized cash erosion. However it doesn't matter as CHCG stock holders don't have any claim on the underlying assets. This was a lesson learned the hard way on investing in US traded Chinese companies.

Hit: +215% in Fortress Paper (FTP/TSX). Sold out at $30/sh, bought at avg cost of ~$7 in 2008. Flop: -50% in China 3C Group (CHCG/OTC). Still holding at $0.225/sh, bought this year at avg cost of $0.48. Trading at half of net cash per share but I didn't learn until later that the stockholders only have an economic interest in the earnings of the underlying business, not the net assets. Top idea: New Frontier Media (NOOF/Nasdaq). Trading below net tangible asset value. Decent business in adult film production and distribution (better than Playboy at least). Now trades at $1.80 but I think the shares are worth $5-6 when earnings normalize.

Hi all, Do you know of a good value investing club in Toronto? I just moved here from Vancouver and could not find any on meetup.com. Vancouver has a couple of good clubs I was lucky to be apart of and am looking for the same thing in TO. Thanks

From pg. 9: "At the end of 2009, we have approximately $579 per share in insurance and reinsurance float. Together with our book value of $370 per share and $115 per share in net debt, you have approximately $1,064 in investments per share working for your long term benefit." That is a strong value proposition. Then there's the future underwriting profits to throw on top of all that.

Valid points on the drawbacks of valuing BNI on asset value alone. Although the high replacement cost acts as a moat. Buffett said in a recent Charlie Rose interview that it would take a competitor $100 billion or so to go up against BNI. twacowcfa: There may be untapped pricing power but how does this fair with the fact that BNI's business is regulated?

Could the rail tracks BNI owns be a hidden asset not recorded on the balance sheet? They own 40,000 miles of track, which is enough to cross the U.S. multiple times. The replacement value of this asset is huge. Land and track structure was carried at $21 billion (before accumulated depreciation) on the balance sheet. This implies $0.5 mil per mile, low compared to recent project estimates. I'm not a rail expert but one example I found was Canadian Pacific's Powder Basin expansion which covers 262 miles and is estimated to cost $6 billion. http://www.coaltransinternational.com/htm/f20080220.994756.htm

From the perspective of the number of opportunities I'm find, it's a tough market. I don't know if it's because I was so spoiled for good choices in March 2009 but it seems to be slim pickings now. The following article discusses a SocGen report on the matter. They used a Ben Graham screen and only found 14 stocks meeting the criteria from the MSCI World Index. http://online.wsj.com/article/SB10001424052970203706604574372943465964818.html

Thanks, Vinod. I think your notes are great.

I wouldn't dismiss BYD as a viable carmaker. Sure it's a Chinese company but it doesn't mean we can apply general Chinese company stereotypes to it. Munger said that what BYD has done is a bloody miracle. It doesn't sound like a typical company to me. They have a car that looks like a Benz model but many designs are "borrowed" from others. Some of the most important inventions in history were improvements of prior ones. The Europeans took papermaking from the Muslims who previously took it from the Chinese.

Attached is Peter Cundill's track record when he was managing the Cundill Value fund. The MSCI World local currency benchmark is used as the fund had a policy to hedge its FX exposure. IMO, Tim and Francis would both be wonderful CIOs of a large asset pool.

Keep in mind that most of Sprott and Chou's great performance numbers, when they shot the lights out, were when each of their assets under management were tiny (less than $100M). I stlll think both are great managers and are capable of doing better than their respective benchmarks over the long-term. However, they manage such large amounts of capital these days that it will certainly be more difficult for them to generate pre-2000 returns. An additional note on Sprott. It appears his strategy has changed over time. He uses a more top-down thematic approach now, perhaps to accomodate his larger asset base. Whereas in his earlier days he was more of a stock picker. Francis doesn't look like he's changed one bit (which is a good thing).

I don't think Tilson accounted for the loss reserves and debt in his $71k per share deduction off the share price. Not all of that $71k will go to the company because insurance claims will have to be paid out in the future. The loss reserve on the balance sheet is $36.5k per share. Even if this figure is conservative and overstates the true future claims expense obligation of the insurance policies, I think some amount should be deducted. Also, the total debt is ~$24k per share. This definitely needs to be deducted from $71k. Is it not fair to deduct the investments on the balance sheet off your purchase price and not add the debt? After making the above adjustments, I get closer to $66k per share of intrinsic value. The difference is from 36.5k and 24k in loss reserves and debt, respectively. With this being said, I think Whitney Tilson is a smart, accomplished investor and I do enjoy reading his writing.

The latest Third Ave letter from Marty Whitman & co is now available at: http://www.thirdave.com/ta/documents/sl/shareholderletters-09Q1.pdf Both Whitman and his successor, Ian Lapey, have made substantial investments in their flagship mutual fund. A class act to disclose this information. Within the portfolio, they've been finding a lot of net-net asset opportunities. Their approach is a modification of Graham & Dodd's. A very nice read.

Buffett quotes winning the Ovarian Lottery as one of the reasons he is giving away most of his net worth for philantropic uses. Good point on being fortunate enough to live in a society where what you love doing provides financial reward and recognition. There are other jobs that impact society just as much (if not more) than being a capital allocator, such as a doctor or teacher, yet none of these occupations are nearly as financially rewarding. Gladwell pointed out that a good portion of the richest people in history were from the industrial age of American history. Beyond that the list includes others such as Bill Gates, WB, and the Waltons. Clearly the American system works! I'm inspired when he says that his donation doesn't feel like a sacrifice at all, even though on absolute terms it's a massive contribution, because the money won't affect the way he lives. Whereas a school teacher giving away 10% of her annual salary will have a more constrained financial situation even though she's giving away less money.