Myth465

Honestly the FFH hedge has me rethinking my strategy. I have about 25% cash and am heavy into 2-3 stocks with known catalyst. Prem owns a big chunk of FFH so its a good proxy to see what he is doing with his money. It seems like the really smart money is worried, and it also seems like the smart economist who predicted things are worried. Interesting times.

Thanks so much for the MP3, now I am exited. I hate having to call in.

This seems like a great idea to research, take a 1% option position on, and to watch for the right catalyst. I dont like court cases though, not sure which way the Judges / Jury will go or what smoking gun they may have. Thanks for the tip. I will dig in after earnings season if I have time.

You have a point it is extremely busy, and I couldnt find the market cap in very quickly.

As someone who would like to go to Columbia one day. I was left thinking WTF. Hopefully things have improved. Li Lu came off like a dick, but thats sometimes how I come off so it didnt bother me much. He honestly wasnt asking for much. Whats the market cap? Whats the cash flow? Lol on Greenwald. He seems like a great guy, but his style seems to complicate value investing to me.

Thanks Tariq, terrific interview. I buy all at once or overtime, depends on the catalyst and conviction.

first question: do you have enough industry insight to sit on the board of White Mountains? Second: Are you intimately familiar with the business of insuring munis? Third: Have you poured over MBIA recent SEC documents for days on end and hired consultants do a forensic analysis of the accounting? NO? take it easy there Peter . . . rough day? I have nothing but respect for Bruce Berkowitz, I just don't understand these investments that he has made. I have followed most of his investments and when he has spoken about them I have found his analysis to be very insightful. However, with AIG, MBIA, MS etc. I have a hard time understanding what he sees there. Maybe I am blinded by hatred for financials or biased because these companies needed to be saved from death with taxpayer money a few months ago. This is why I said "I still don't get it . . ." rather than "Bruce Berkowitz is an idiot, who here will defend his honor?" Smart people don't generally get stupid overnight and Bruce has a lot more experience and resources than I do so I would assume that this will somehow work out for him, I just don't understand how . . . from where I'm standing it looks like MBIA and AIG are insolvent and MS seems to have lost a good deal of franchise value. I was hoping someone on the board might also like these investments or have some insight into Bruce's thinking beyond his brief public comments. Considering that AIG is owned and propped up by the government right now, I think being a member of congress would give you more insight into its ultimate value than being on the board of WTM. WTM is a great company, but that doesn't make its board members experts on the value of AIG. I would say that I'm pretty familiar with the business of insuring munis (we haven't been intimate yet though). I understand that even defaulted munis require very little upfront cashflow from the insurer, but MBIA is arguably bankrupt - maybe you should take a look at Marty Whitman's lawsuit against them for the other side of the argument. Warren Buffett is arguably an expert in insuring Munis and he decided to get out of the business. I don't understand why Berkowitz is investing in a company that could be insolvent pending a serious lawsuit, in a business Warren Buffett won't touch, but again, this is probably a failure to understand on my part - I'm just curious what Berkowitz knows or understands that I don't. Do you have anything to say on the merits of these investments? NO? Thanks you just perfectly captured my thoughts and saved me 10 minutes from having to type all that. I hold Bruce B in high regard, and he is one of the few managers I have recommended or would let manage my money should I get lazy, but I dont understand his recent positions / investments. From Joe to Citi to AIG to Morgan Stanley to now MBIA.

I would love a tool like the one Ericopoly described, but the tax situation is easy enough for us value guys to figure out. I feel sorry for day traders. What I would like would be a document that allows you to track things from reported financials and input notes. Imagine Google finance, with a FCF yield field, intrinsic value field, discount to intrinsic value, and a few blank fields where you could put notes for the position. Something like that would be very useful. It would be even better if it pulled in your position but that would be difficult to do. ---- Thanks for the Wiki Invest link. It looks very interesting. I use Yodlee which works out well but, I have a real hard time giving Wiki Invest my login info. I am not sure how they will get around that for most folks.

Singleton and Biglari (lol) thus far have the best ideas on buybacks. Use them as a tool. Issue shares when stock is over valued, and buy back back when its not only cheap but one of the best available investments to you. FFH, BRK, Loews, and Lancashire all know what they are doing and have all used buybacks effectively when needed. My company sucks at this, they buy high, and dont buy when things get rough. Its what most companies do. The worst ones even sell new shares when things get rough. I prefer dividends from all but owner manager companies. Its hard to screw up a dividend but buybacks get screwed up everyday.

Looks cheap, about 3x CF TTM. Also CF has gone up significantly each year, have they been rolling up companies? Any idea on when the case will end?

Shiller sees double dip for Housing / Economy http://www.gurufocus.com/news.php?id=101299

Hey Eric do you feel better about SSW and FUR vs. something that wiggles around. I think once you start living off dividends and you wont have to work again, you view things differently. I like getting my checks. I like buybacks as well but they are usually done wrong, my company bought back shares in the $40 range and then stopped to "concern capital" during the financial crisis at $18 a share. The right time to buyback shares is similar to the right time to buy stocks in general (when you dont want to / are scared to). I would hate to see FFH buying back shares at 98% book value. Also I believe they were looking for a ratings upgrade.

I think the Interchange fee is much bigger then other interventions. Stiglitz and several economists have pointed to it to show how the free markets sometimes fail to reduce prices. It has also been in the Economist quite a bit, and finally its just plain wrong. Why should Visa get a cut of every dollar that comes across their network when it literally costs pennies to move the money whether its $5 or $5,000,000. You also have a huge special interest that will eventually push to have it reduced (Wal-Mart, and other retailers). Its also a big tax on the American public. I am not sure what was in the final bill, but know its not the last we have heard on these fees. http://www.cuinsight.com/456/media/news/finance_reform_bill_impacts_interchange_fees.html Following today’s Senate approval of the Finance Reform Bill, PSCU Financial Services’ Interim CEO Mike Yatros said he is extremely disappointed with the new debit interchange legislation and rules that will give merchants new control over usage of cards at the point of sale. The final bill includes the following actions: * The Federal Reserve Board will regulate debit interchange rates. These rates cover all debit and prepaid cards, signature and PIN, and all card payment networks. Financial institutions with less than $10 billion in assets are exempt from the interchange rate action. * Retailers can offer discounts for payment method (cash, check, debit cards, credit cards and prepaid cards) but will not be permitted to offer discounts for payment network brands. * Retailers can apply minimum dollar amounts (no greater than $10.00) for credit card usage. * Issuers and networks cannot limit debit card transactions to only one network and cannot restrict a merchant’s ability to route transactions to any payment card network that processes their transactions. ---- Despite all this, Visa will mint money, I just have issues with the pricing. Imagine cash will eventually go the way of checks and will be replaced with credit card and mobile phones over the next 50 years. Each year that pie for Visa gets much bigger.

Baron do you think the Amazon creep into EBay's market thesis is overblown?

Honestly this is one of the few companies that I have come across that actually has a moat. Much stronger than EBay, Google, Apple, or MSFT. Only the Government and a monopoly breakup can take them down. The only other fear is a change in how transaction fees are charged. Right now they greatly exceed their cost, and Walmart and other retailers may push to have this corrected legally. This idea really peaked my interest, my only concern is costs. I see them generating $4 billion in cash (annualizing Q1) at $63 billion it seems a bit pricey. Granted it should probably trade for 20x CF given its growth prospects and monopoly / duopoly.

Lol

Too bad my bid never got filled. Definitely great news.

It seems as though the cycle may have bottomed in Shipping. I own KSP and SSW but what does the board think about the oil tanker stocks and the dry bulk shippers. I follow TNP, and DHT and think things are getting interesting. Right now they are plays on the economy and I dont think the timing is right. I have also looked at DRYS and it seems very cheap. They have some current debt coming due, but the price looks right. Who was paying 110 for it a year and a half ago? I would prefer for the economy to stabilize before moving in, but this seems like a good industry to watch, it should bottom and begin to rebound sometime over the next 2 years or so. What do you all think?

I visit here, VIC, Guru Focus, Investor Village (for 1 stock, CEN), Yahoo Message Board for a few stocks. Believe it or not I have found useful things on all boards but here has been the most profitable. I look for outlier posts. Either those that agree with me or are directly opposite. It works rather well, and I have gathered bits and pieces using this method.

SD has been severally battered, It seems like an easy buy at $6. hopefully we get some guidance going forward now that Arena is behind us. He thinks they will be 70% oil by next year. They now need to focus on living within there cash flow and paying down debt.

Fair enough Hawk but you are risking the Republic for Ideology. Risking bankruptcy due to your personal thoughts on taxation and asset allocation. Its very irresponsible, and those that advocate it shouldn't be allowed to pretend they are taking the noble role or are willing to compromise.

I am doing a bunch of small cap stocks. KSP, ATSG, ESV & SD Leaps, Coastal Energy. Things like that. I am raising cash and buying long dated March options on names I think have relatively good catalysts (KSP, ATSG). I now have about 20% cash.

Bruce Bartlett (b. October 11, 1951, in Ann Arbor, Michigan) is an American historian who turned to writing about supply-side economics. He was a domestic policy adviser to President Ronald Reagan and was a Treasury official under President George H.W. Bush. In August 2009, Bartlett wrote a piece for the Daily Beast in which he attributed the recession of 2009 to George Bush and Republicans, whose policies he claimed resulted in an inferior record of economic performance to those of President Clinton.[11] In the same editorial, Bartlett wrote that instead of enacting meaningful healthcare reform, President Bush pushed through a costly Medicare drug plan by personally exerting pressure on reluctant conservatives to vote for the program. Bartlett claimed that because reforming Medicare is an important part of getting health costs under control generally, Bush could have used the opportunity to develop a comprehensive health-reform plan and that "y not doing so, he left his party with nothing to offer as an alternative to the Obama plan."[12] Bartlett concluded: Until conservatives once again hold Republicans to the same standard they hold Democrats, they will have no credibility and deserve no respect. They can start building some by admitting to themselves that Bush caused many of the problems they are protesting."[13] -------------- To understand modern Republican thinking on fiscal policy, we need to go back to perhaps the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy: “supply-side economics”. Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. ... It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch? How did supply-side economics bring these benefits? First, it allowed conservatives to ignore deficits. They could argue that, whatever the impact of the tax cuts in the short run, they would bring the budget back into balance, in the longer run. Second, the theory gave an economic justification – the argument from incentives - for lowering taxes on politically important supporters. Finally, if deficits did not, in fact, disappear, conservatives could fall back on the “starve the beast” theory: deficits would create a fiscal crisis that would force the government to cut spending and even destroy the hated welfare state. In this way, the Republicans were transformed from a balanced-budget party to a tax-cutting party. This innovative stance proved highly politically effective... It sounds like some of you are for bankrupting the country due to Ideology. Sounds extremely irresponsible.

In my opinion its a left vs right issue. Both sides are flawed. My thesis is do what you want but pay for it. The thesis I hear from you is starve the government and push the country into crisis because you dont want to pay for it because you have something against government. I think thats irresponsible. The American public has a right to choose free healthcare, expensive good public schools, or whatever else they want. They however need to be told they will be taxed heavily for these things. Government does a horrible job of allocating capital but both parties keep spending money and one is totally against paying for it. I think Ideology needs to be set aside and tough decisions need to be made. This article details my problems with the right. http://economistsview.typepad.com/economistsview/2010/07/the-monumental-hypocrisy-of-the-republican-party.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%27s+View+%28EconomistsView%29%29&utm_content=Google+Reader Mr Bartlett: The Republicans don’t have any credibility whatsoever. They squandered whatever they had when they enacted a massive UNFUNDED expansion of Medicare in 2003. Yet they had the nerve to complain about Obama’s health plan, WHICH WAS FULLY PAID FOR according to the Congressional Budget Office. The word “chutzpah” is insufficient to describe how utterly indefensible the Republican position is, intellectually. Furthermore, Republicans have a completely indefensible position on taxes. In their view, deficits cannot arise from tax cuts. No matter how much taxes are cut, no matter how low revenues go as a share of GDP, tax cuts are never a cause of deficits; they result ONLY AND EXCLUSIVELY from spending—and never from spending put in place by Republicans, such as Medicare Part D, TARP, two unfunded wars, bridges to nowhere, etc—but ONLY from Democratic efforts to stimulate growth, help the unemployed, provide health insurance for those without it, etc. The monumental hypocrisy of the Republican Party is something amazing to behold. And their dimwitted accomplices in the tea-party movement are not much better. They know that Republicans, far more than Democrats, are responsible for our fiscal mess, but they won’t say so. And they adamantly refuse to put on the table any meaningful programme that would actually reduce spending. Judging by polls, most of them seem to think that all we have to do is cut foreign aid, which represents well less than 1% of the budget. Unfortunately, I don’t think Democrats have the guts or the stamina to put forward a meaningful deficit-reduction programme because they know—as I do—that it will require higher revenues. But facing big losses in the elections this fall I can’t blame them. That leaves us facing political gridlock between the sensible but cowardly party and the greedy, sociopathic party. Not a pleasant choice for those of us in the sensible, lets-do-what-we-have-to-do-for-the-good-of-the-country independent centre. ...

Thanks guys based on the replies im happy to put them in the too hard pile and move on.