Myth465

Im kinda shocked with SD. I cant wait to sit down with the 10k. I dont know when we take care of Nat Gas but when it happens Loews will mint money with BWP. They have unlimited growth with BWP and those IDRs will become quite valuable once they past the split mark. I agree with you that its slightly overvalued but Loews will make a killing on it with year over year growth in volumes and income. With that said I dont want them to buy more energy holdings and would prefer for them not to do a deal which involves wet gas or oil. We are too leveraged to oil and gas as it is.

I just take them at book value in terms of assets. I dont think its that significant in terms of the value of Loews. I prefer the BWP holding which will receive IDRs. They really should grow the platform or sell it. I dont like hotels and much prefer REITs.

Huge move today, I am sitting pretty and FFH is doing great with converts at $7 or so. This is going to be a major source of gains for them. CONesal - I dont think Ward knows. They havent finished the first Trust, and he has stated its his preferred vehicle. The problem is the trust needs proved producing reserves as well as yet to be producing reserves, due to the fact that Income has to be provided from day 1. I glanced through the filing and it looks like he is 1. selling most of the proved up producing land to the trust. 2. selling raw unproducing land to the trust. 3. contracting out 4-5 additional rigs to get that land to producing over 3-4 years. The cash for the rigs and capex come now and funds this. He can rinse and repeat, but will not have enough producing property to contribute to enough trusts to put the whole play in this type of structure. So that will require a JV. He has to do something those lease are only 5 years, so they cant sit on the acreage. Ward is telling you what he knows now. Trust is preferred vehicle because he gets cash in hand and can maintain control. JV is next because he has no choice, cant hold all 900k acres. I would like to see them buy more rigs. Perhaps buy LUKs rig division. ---- I plan to spend alot of time with the 10k. I dont know whats all in the PV10. Have they written off alot of gas due to the low price (which we can put back in at $6 after 2013 or 2014), does it include all reserves in Miss and other plays, and as you have said what about the low price used. What happens to PV10 at $85, $100, and $115 dollar energy. Perhaps an email to investor relations is in order and perhaps they can give us some sort of sensitivity number such as a $1 move in oil effects PV10 by .... ---- Just listened to the Cramer interview. Ward is a genius in terms of operations. I learn a bit more with every interview. I cant wait to listen to the call. I hope they keep hedging out to 2013 as oil moves up and they then bury loss moving hedges into the future oil trusts.

I hold deep in the money SD leaps $5 2012 and 2013 purchased when SD was at $4 - $5. The 2013s were pushed out from 2012s which I sold (roth account) and are now in the money. Positions were 1 to 1 originally but SD leaps are up 200% prior to this release. FBK is up 34%. ATPG leaps are up 50% and ESV leaps are up 115%. Its why I could understand why people sold FBK. They keep disappointing and the sell talk is purely speculative. Its not something I want to own based on FCF becasuse I have no idea where pulp is going or how to predict that cycle. I know oil could crash, but believe long term its up up and away. With that said, I am always disappointed on earnings (was on SD last Q), I will likely have cup of tea, read your post, update my thoughts, and hold everything for better or worse ;D. The guys at ATPG need to call Tom Ward. He knows how to handle WS and is making all the right moves lol (I hate quoting Cramer).

Nice release. I wonder whats in PV10 and if it includes all miss or only booked reserves. Ward will probably do a few more trusts and then will do a JV to drill the miss. They have to do something big to hold the whole thing by production. The leases are only 5 years and we can only drill 250k on our own. Its a nice problem to have. I cant wait for the call. This is my largest holding.

I prefer debt free. It gives them maximum flexibility. I would want a sell / takeover or debt free with dividends of all cash flow over capex

I feel you. I just dont think those selling are idiots or over reacting. I think they have there reasons and I can understand them.

I can understand the selling. FBK has a history of disappointing. Its like owning an oil company at $100 oil and they keep finding ways to lose money, let you down, or under deliver. It gets old and commodity cycles turn, everyone else seems to be making money while dealing with the facts of their business (shutdowns, labor issues, and what not). Some people bought on a turn, and some people are booking their 40% - 300% profit and moving on to greener pasters, especially in a situation where having some cash on hand is nice. I know I have thought about it. Would bump me up to 10% cash. What are the odds that Q1 doesnt have some obscure blink which causes a disappointment, but is strictly a one time deal ....

Buying puts on Coke would have triggered a "constructive sale". That's why I suggested hedging against the index as Fairfax does. Aw good point. I remember talking to you about the tax rules with puts. Humm, ya given that he should have found an overvalued basic to short / buy puts against.

I think thats over complicating things.

As ERICOPOLY said puts would have been nice. I mean it was pretty overvalued.

Those quality assets have earned very little return over the last decade. I prefer the FFH way. Deep value. Deep dirty, dingy, smelly value. Though FFH seems to have interesting taste in deep value. Its always something that makes me go yuck and throw up a bit in my mouth (my investments probably do that for some people). Coke should have been sold about 10 years ago. Holding that great asset has been a waste of time. At the very least puts could have been bought against it. I like those preferreds though.

Who asked this question ;). Please someone at the annual ask this question. I would really like to get the answer to it. Its something I have wondered. http://www.gurufocus.com/news.php?id=123290 A Long Time Shareholder Asks a Good Tough Question The one thing I did notice in your common stock portfolio, there's a lot of very messy equity decisions that have been made in the last one or two years. When I thought that you guys would have used your liquidity to buy higher quality things given how much money you guys had and how some very large liquid companies were available. I'm just throwing out names not making any suggestions like Colgate, United Technologies were really cheap, but you guys invested in level three and more and of more level three, the pulp company and the regional airline and these sort of things Dell, overstock, USG, and I'm just wondering, is this something in the DNA at Fairfax that attracts you to these overly messy things, I mean just like the history of buying messy insurance companies? Watsa Responds we have our annual meeting in a couple of weeks, Jaideep. Actually our Annual Report comes out in about two weeks then our annual meeting is in April; I think it's April 20th, it is somewhere there in our annual meeting. Why don't you come for that ask all your questions there, because those are a little detailed questions for a conference call. ------------------------------------- I predict that FFH pulls another rabbit out of the hat with the recent bond dislocation. Watsa On Potential for Muni Bond Opportunities But if I could just tell you, just highlight it again for you, with these Berkshire Hathaway guaranteed, muni bonds, when you're getting 5.5%, 5.75%, some issues at 6%, the pre-tax equivalent is pretty close to 9% – 8.8%, 9% depending on the tax rate. Now, these are bonds that will give you that for 10 years, non-callable for 10. So the way we look at it is that no credit risk with that, there is very little credit risk. We collect 9% on our money approximately for the next 10 years and the fluctuations in the values go into our balance sheet up and down, and doesn't have much impact on us. Another way to look at those muni bonds is to say, what does – that 8.8%, you compare that to 10-year treasuries at 365. So 365 for 10-year treasuries and muni bonds at 8.8% guaranteed by Berkshire Hathaway. So you have that discrepancy and those discrepancies in our view with being in the market for long time they don't last for long and they will change. For example, we go into the marketplace. We can't buy $1 million of Berkshire Hathaway guaranteed bonds even though the yields are 5.75% and 6%. There is none for sale in the marketplace. It's a bid. There is a pessimism on muni bonds across all muni bonds and perhaps some justified but we think totally unjustified and the ones that we have. So we look at this as a time of opportunity but there is if you like the rates but there is very little available

This is purely political (what isnt these days). I would hope everyone could see that. By conceding the Unions have taken the budget issues off the table. He basically just wants to bust the Union (which could be a good thing for those that agree with his policies). Americans are made as hell at unions, im a Corporate guy but know the quality of life we have that everyone envies is largely cause of Unions. This is an accounting issue inmo. Its funny how the rule of law and contracts goes out the window when its not big business. Thats my rant for the day.

Well we have the beginnings of a slight pull back. Everything seems to be down.

I am thinking about getting a focus. It just costs as much as my laptop though lol.

http://www.gurufocus.com/news.php?id=123169

Lol thanks for the warning. Always useful on a value investing board. Faber is turning out to be more wrong then right these days. We are all doomed. The middle east is turning into a power keg.

I dont think it is guaranteed to be a hard landing and really only like CDS when the other entity goes bust. Other then that you are relying on the greater fool / panic to make you money. Aussies do inmo have a huge sense of denial though. Its interesting talking to one about housing. So far this is in the too hard pile. I dont think its worth it unless you can find a home builder / property developer to short with options if possible.

Dazel thats an interesting and refreshing perspective. Everyone (including myself) likes to beat on the sleeping giant, but perhaps America does have a purpose. Nat Gas is a huge mess in my opinion. Developing it will require some sort of central planning which is out of fashion in the US. My advice, grab an oil driller who has some gas assets which can be ramped up on the turn (SD) or a deep water high pressure gas driller (MMR) who has extremely low costs. Then wait, Exxon is in the gas business and will buy off Washington to do whats best. Capitalism at its best?

Very nice presentation. Really pulls everything together. I may buy a bit more after I see the numbers.

Agreed. Parsad. In America the masses have inmo been hoodwinked and we are basically getting the Government we deserve. Most Americans have a slight distrust of Government and many has a visceral hatred of it. No one wants to be taxed but everyone wants services. Churchill had us pegged, We will do whats right when Moodys, S&P, and China tell us we must. Till then everyone will Monday morning quarterback (including me).

Very interesting Cardboard. I also use options to make large caps as interesting as small caps.

I am overweight oil and after a jittery week plan on holding. My guess is this is the last straw needed to end the moratorium and push energy policy back on the front pages. More importantly I want to know how it ends. I still think the richer states are safe (Kuwait, Saudi, UAE), but these smaller ones with internal issues in North Africa and Bahrain are interesting. I dont know if the world will stand buy while these guys fight it out. Interesting / saddening news.

Thanks again, wonderful community and very profitable board.