Myth465

Monish Pabrai - "Plan A is always to buy the Coke and Moody's of the world at 50% off. If you buy these type of businesses at that discount and it takes 2-3 years to trade at intrinsic value, you'll do very well. Intrinsic value will be much higher in 2 to 3 years. So 50 cents may be worth $1.30 or $1.40. This is always Plan A. But plan A is virtually impossible to execute across the entire portfolio because they are so very very rare. (Work Horse Positions) When plan A fails, we go to plan B. Plan B is to buy at half off, regardless of business quality (as long as you're pretty sure intrinsic value is very unlikely to decline). Most of Pabrai Funds investments over the years have been Plan B."

Lol I would say they are due for some good news pretty soon.

I would be fine with a div cut. I would like them to do something strategic and they are building up cash so we may see something soon. DO should buyback stock or buy assets in the drilling space.

Ferguson's thoughts - http://www.gurufocus.com/news.php?id=99087 Krugman on Colbert - http://economistsview.typepad.com/economistsview/2010/07/krugman-on-colbert.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%27s+View+%28EconomistsView%29%29&utm_content=Google+Reader Summary of Soro's Thoughts - http://www.gurufocus.com/news.php?id=99084

The CEO (of Loews) will be on Wealthrack this week. Should be a good episode.

Thanks for the link. Cameron is definitely the right man at the right time. Hopefully conservatives on this side of the pond can copy and get their act together, right now they dont stand for much.

I will likely order my rights to be sold. I just received the paperwork and will be calling my broker. It also looks as though I could tell them to exercise (based on a review of the paperwork). I have about 8000 rights and bought additional shares at .98 cents. No point in buying rights for me. Selling shares to buy rights was a shred move and may have something to do with the share price. I would rather have the $50 than nothing at all.

I am back to trying to raise cash. I bought more SSW, FBK. I have also bought LNET, ESV Leaps, SD Leaps, ATSG Options, KSP Options, and Boyd Income Group over the last month or so. May be a bit early considering the chatter about the markets.

With regards to healthcare I am fairly radical. Here is what I wrote in a PM to another member. The solution should have been something fairly far left or far right to cut costs in my opinion. Either cutting out the insurance companies and muscling down big pharma or removing the tie to employee based heathcare and trying to see if individuals make better decisions. This solution is fairly middle of the road and is largely inadequate, but I think he was looking to get something done and put something on the table hoping it would be fixed along the way. I would have split the difference, removed the link to employers by law, and let the states each try out various plans. I am sure Texas would offer little insurance out side of Cat coverage, and Cali would offer free healthcare. The best plan would eventually be adopted by most of the states and we would get to see how a variety of things worked out. There would be issues with people crossing state lines, and issues with people moving when they get sick, but they could have been ironed out. --- Realistically though that's political suicide. The second you do that the other party says you are destroying healthcare for 80% of Americans. I dont think there was a viable compromise so I dont have a problem with the ram through. I tend to think most progress in the US is made in a similar manner. It just looks much better in retrospect. I dont see how you can compromise on healthcare, privatizing social security, war, abortion, gay rights, civil rights in the past - or other hot button issues. It just doesnt work and is a winner take all thing inmo. Generally one side wants it and one side doesnt. Bush won some of his fights (for better or worse) and Obama got his lame healthcare bill though. Its on to the next battle. People get annoyed. Republicans get in and we get tax cuts and whatever else they believe in. --- Long term spending must be cut. Form a pact to include $1 of military cuts, $1 of entitlement cuts, and $1 of tax increases. Each side must make cuts in equal amounts. Then pick a number say $30 billion or $300 billion and each has to come up with their share. Tax cuts have to be spread equally or progressively. Then pass a second stimulus plan, extend unemployment benefits (reduced benefits - cut them by 10% every 2 months), and do something about the states which are all cutting now. Then have the best minds in Government (it feels weird typing that) select very high return projects for this second stimulus. Finally consider ending 1 of our wars, and close a few redundant international military bases. The problem is you cant do that, when one side is pushing for tax cuts, and complaining about the deficit when they ran up huge ones for years (I thought they didnt matter). If I was President, I would be spending and praying. I think they are screwed either way, but sitting on your hands and hoping it self corrects isnt much of a plan. It was tried by Hover and we know how that worked out. You have a long term deficit problem (medicare, Medicaid, health-care, ssi, and lack of grow), and a short term economic problem. Both have to be kept in focus. --- Here is a Krugman Interview with Charlie Rose - http://www.charlierose.com/view/interview/11102 I haven't watched it yet. Barton Briggs Basically said the same thing - http://www.gurufocus.com/news.php?id=98945 I think everyone here knows the rally was a fools rally and the economy is / was still quite sick. Pulling back just doesn't make any sense. Its a situation with a bunch of crappy options and crappy outcomes but that is not a reason to just throw in the towel.

I probably didnt see the June one. It seems like they are going to great lengths to sell the deal to Arena, and the Go Shop period has ended.

The updated July presentation is very interesting.

I finally got my hands on some SD leaps. Hopefully we get some news on the merger soon.

I bought my last little chunk today. Hopefully this mini correction ends soon, it seems like all my small cap holdings are getting killed. Though I am not sure what will break the sentiment. Maybe earnings season?

I plan to look at it again this weekend. LUK seems to lack that fat pitch feel for me. Its a nice 2 - 5% postilion though.

Interesting. I may have to take a look. Thanks for the insight Parsad. This has been on the board a few times.

I tend to blame Republican's they have an illogical ideology and in my opinion have no principles. As misguided as liberals can be, they tend to mean well and be fairly predictable. When we had a surplus they want tax cuts and spending cuts, when we have deficits they want tax cuts and spending cuts. It seems like they have a hammer, and every problem is a nail. How can you say deficits dont matter, start 2 wars, still cut taxes, and then bitch about the deficit in the middle of an economic collapse which resulted partly from your policies. Democrats tend to want to run counter cyclical policies while republicans basically want to starve the beast regardless of whats going on in the economy / world. They also cling to free markets and no intervention regardless of what bears out or what the facts say. I understand principles and compromise. I dont have a problem with healthcare. There are real and fundamentals differences there and there could be no compromises. On just about everything else the Republicans are fairly unreasonable. Look at financial reform. Who is on the wrong side of that issue? I agree with Zorrofan. The WH is screwed no matter what they do and its largely in gods hands at this point. What the right / Austrians want is for them to basically fall on their sword. No one has answered how the economy will self correct, no one has answered who will increase demand when stimulus is removed? Given that we know the logical conclusion to pulling back, why do it?

Very good article. Hopefully more people read it. Thanks.

Ferguson talks about maturities, and its an interesting point. They are getting shorter and shorter. The only issue I have is the government can still simple print up the money and pay off the debt, whether its due next year or in 10 years. Dont get me wrong it will cause fiscal hell but it can be done. My problem with people who want to cut spending is they arent serious enough. They want to cut spending in a why that causes a double dip (removing unemployment extensions for example), but ultimately does nothing about long term debt. It seems a bit pointless. The same people vote to keep biggest spending program we have going Afghanistan and Iraq wars, but then want to cut services which cost pennies in comparison. I think you need to go extreme one way or the other. Take an axe to just about any spending that isnt required to cut the deficit and debt, or use counter cyclical policies (which means savings / paying down debt when times are good). I think trying theories from all economic schools (they all contradict each other) will do nothing but exasperate this problem. Trying theories from a school that says markets are efficient and self correct, appear to me to be a recipe for disasters.

Easier. I know Obama, and who ever else is elected doesnt want to be the first President of the US to default on the nations debt. Much easier to just print a few Benjamins and pretend they are still worth something.

Do you mean the credit ratings decoupled?, or Argentina defaulted on debt in its currency? With regard to the first one, I the ratings may decouple and a few businesses may do well but I think we would all be screwed (holding the equities of US specific firms, and more importantly living in the US) if they didnt sort this out. Even GE was having problems getting cash and many would have thought they were fairly safe. Severe Inflation or deflation seems to ravage most businesses in one way or another.

I tend to agree with the basic thesis that its hard for a company to have a better credit rating then the country it operates in. I think deterioration in US credit ratings / the US economy will affect companies which heavily depend on the US Markets. I also dont think we will see decoupling. I also agree with Stiglitz and Krugman. A country cannot default if debt is owed in its own currency.

FUR seems like they will be making good money going forward as well given the recent transactions. It looks like they will be taking over some buildings on the cheap.

It does make you think. There should be a fairly simple audit trail for this sort of thing.

LRE is the only insurance company I hold. We have our first storm of the season. Thanks again for the links. I will be looking at a few of these over the next few weeks. Should be interesting.

I figured that would happen, based on the release. They had some legal stuff about maybe being able to participate if you were in the US. I think alot of this was planned and may work out in our favor. FFH gets a huge chunk of FBK and gets basic control, we can buy cheaper on the open market if we want. Less float, any good news will shoot up the share price due to the float. This has kinda played out how I thought it would. Now the question is do you buy?