Myth465

I just dont see the rationale. If they wanted to sell why would they need capital. Couldnt they sell the Canadian or US business for cash and then run the other with no debt. Buying assets makes more sense, but I dont think buying with pulp at $1000 makes sense. I could see FFH wanting to buy because they would own alot of SFK and it could be their vehicle to consolidate the market, but you would still be buying at the top. Also Sharper does have a point. SFK makes more sense being acquired due to the lack of cheap access to wood chips. The simplest solution is they want capital to run the business in an un-levered manner and to prepare for the next downturn. I guess only time will tell.

I agree, he seems to be a young Chinese Munger. He is or should be on the short list and I really enjoyed the video. Thanks again.

I would leave them alone. Though I think it will be profitable at the current price. I believe there are better values elsewhere. The land drillers have been just as beat up and they have no exposure to this mess. I bought Coastal Energy - CEN.V at $3 or so a week ago. I looked at Hyduke last year and will have to relook again. High-spec rigs seem to have high utilization and the drillers keep building them dispute the downturn. Interesting.

Here is another presentation. http://www.sec.gov/Archives/edgar/data/894081/000119312510118607/dex991.htm

Alright I am hoping the third time is the charm. I keep up with Rogers and Faber just to avoid being so optimistic. I think Jim Rogers has an excellent point and its something I will remember going forward. Jim Rogers - I would expect the stock market to continue to have problems over the next little while. I mean the stock market went up, Susan, for 13 or 14 months in a row with no correction at all - essentially no correction at all and that's not normal. So it's time for a correction. Whenever there's a time for a correction, the market finds a reason to correct, whether the Greece or who knows what, the market in my view is going to continue to correct for a while. ---- So whats on the watch list for you all? After the corrections last week I was able to raise 20% cash. I believe Parsad is correct, things will be a bit bumpy so one shouldnt spend the cash all in one place or at one time. I plan on waiting a few days, but hope to add to SSW and LRE - IRA. I am also watching SD and PDS and plan to buy options and leaps for both of them - Both Accounts. I also am looking to buy back CNA and Loews in smaller portions - Taxable accounts.

I would definitely invest in such a company. I have learned so much here and would also like to offer my thanks. Finding the board was one of the best values I have located.

Good point Rmitz, I forgot about that. I owe JEast a few beers. I got a great return with HRP and am kicking myself for missing out on the early stages of SSW. I bought a small bit today at $11.50 3% position and want to triple down under $10. Picture the company surviving the worst downturn in shipping unscathed and contracts in tact. Now model $2 plus in CF and the ability to continue buying ships in a cheap market via sale leasebacks with no dilution and thats SSW. At $6 its a steal at $10 we still should get a good return. I look at it like REIT or ATSG. It throws off cash and the assets have very long lives. I listened to the conference call last night and reviewed the presentation provided. I recommend having a look if you have an Hour. Management also struck me as very high quality. They run the business the same way I would (counter cyclically). Much safer then KSP, but the return wont be as high.

At a 20% discount. Im wondering if its better to just buy now.

This is what I wanted to know. Very curious.

They had a good rationale against the buyback. They have to pay DHL 20 cents on the dollar for every share they buy back, or they can retain the cash and the debt owed to DHL will be amortized over 5 years cashless. I dont like the new planes either. They should eliminate the workers retirement liabilities (market downturns will hit them twice), and pay down debt. I am for expanding when taxes come due, but this should be a year of rebuilding the balance sheet. I think they have a lock on plane conversions and dont want to give that up. They can buy the planes used from airlines and convert them. My guess is they dont want to pay taxes, and want to keep the conversion going. I would like for them to lease all of the planes they have, pay down debt, terminate the retirement plan by paying it down and selling off the liability, and then work from 8-3 managing a business similar to SSW. At that point they can buy 1-3 planes a year, only after obtaining conversion slots and a long term contract. Honestly what do I know. I am fairly simple and like to focus on 1 or 2 things. Management has been pissing us off, but making us tons of money. I thought they should just sign a deal with DHL to be bought for $7.50, but they bought another airline, and seem to like focusing on several things at once. Its worked for them so far. I will watch and see, I will start to trim after Q3. Once we have a run rate cash flow and a non DHL balance sheet (proper working capital, low DHL receivables, and no DHL severance collectibles, we can properly assign a multiple. I like 7-8x cash flow for FV (we have taxes which will need to be paid at some point, and also have a fair amount of debt), and I will start to sell around 7 and minimize the holding to a core 8% position or so.

All and all a decent quarter. Next ones the big one. ATSG was earning 2% market up the DHL revenue, that has to go up with the new agreement. The balance sheet is coming along nicely, and they are purchasing additional planes for $90 million. I am guessing to avoid the tax hit that's due in 2-3 years. The balance sheet isnt great now, but if they had a market cap of $750 million it wouldn't look so bad. ATSG has been a big lesson learned, it was a bad investment at $6, a great speculation at .11, and an amazing investment at $2.5 after the DHL announcement. Also never cut your winners.

Great deal for FFH, considering the discount for the shares they will get. For SFK I am guessing this is there least bad option.

I hope this post doesnt get deleted this is gold. Lewis is fast becoming my second favorite financial writer behind.

The man certainly speaks tough to power. I agree 100%

I wouldnt buy BP. I live in Houston and work for one of the oil field services. Louisiana produces 1/5 of the US's seafood and 75% of the shrimp. If the oil goes in land to the marshes and inland water way then ..... The fishermen have already filed a law suit and they won a similar suit in Alaska for $1 billion dollars during the Valdez. HAL (Performed the cementing), CAM (built the BOP which isnt working), and all the offshore drillers have all sold off (RIG, ESV, DO). I would pick up ESV and DO, I own some ESV and think its a good buy at this point. The President of the US and Louisiana have both said BP will be on the hook for the clean up. I would avoid them because this will be expensive if it goes on for much longer. HAL and CAM would be good buys to but were very expensive before. Basically the whole sector has sold off so its worth looking in the pond to fish in.

I agree Bronco. As it is now they are heavily into Oil and Gas and Insurance. They need something a bit less cyclical to smooth things out in my opinion. Cigarettes were great for that. They are raising cash so maybe they are planning something big.

I agree with Eric. Its a bit of a game of wack a mole and the interest and div cover the combined ratio to a degree. Fairfax isnt like the other insurers and will never have Chubb or Lancashire CM ratios. You buy them for their investing skills. Its similar to asking why one manufacturing cant get the margins that another historically have. To me its the perfect stock for a core 10% position at book value. Pair that with a trading position when it drops below 90% book value and sell that trading position at or slightly above BV. Thats my plan going forward for FFH. I look to capture the 15% that FFH hopes to earn each year and consider excess gains, hard markets, growth in FFH Asia / Brazil, and revaluations to 1.5 BV free options that i am not paying for.

I was wondering why ATSG was going down over the last week.

http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/6978852.html This may bode well for Lancashire. Hopefully they dont have exposure to this, if they then they should do well rate wise on the deepwater book.

Is anyone still buying at close t o $2.

I think its overblown. Germany will cave eventually. German and French banks hold alot of Greece debt so they have double the incentive to help out. The sticking point is they want Greece to pay market rates. That will not work. They will end up paying a decent spread over the German rate when its all said and done.

Thanks to you as well. Your numbers reinforced my thoughts on it. Its hard to hold out ATSG and SFK are becoming my portfolio as they continue to go up. I will relook at ATSG at $7.50 and will likely sell some, I would be open to selling all at $10, I will have a hard sell target once I see Q3 earnings and get a feel for the contracts impact. There is a VIC writeup on KSP. I havent seen it due to me only having 45 day access. If you have full access have a look and let me know what you think. KSP cut there div and quickly fall from $20 to $9. I look at it like a REIT due to debt levels. They had $6 million in distributable cash flow. Things could get worse, but they have newbuilds coming online with contracts at decent rates. I assume that the growth and the future declines net out and take $6 million as a run rate for the year. I ignore the debt due to the long live assets. KSP is in the Jones Act and has a bit more protection than the average shipper. Even given this they trade based on refined crude volumes and the business has gone south over the last few months. They cut the div because they are tight on covenants and have no visibility (contracts rolling off and operators refusing to sign new long term ones (they only want short term ones). Investors hate them because they raised cash with shares at $20 plus then cut the div. Sucks for them, but should workout well for those getting in now. So with $6 million for the q, we get $24 million in distributable cash flow for the year vs a market cap of $182 million. For me this is a worse case scenario. It could get worse for the last Q or the next one, but the new builds should cushion any additional declines. The company generated Ebitda of $80 million a few years back, and removing the single hull ships from the Jones Act fleet will solve any supply and demand problems. Seems like BBEP, let them fix the balance sheet, and sell when it doubles and the dividend is reinstated. I bought now because they announce in a few days. It could go down a few bucks, but could go up. I didnt want another stock to get away from me. I have lost 3-4 due to a raising market. HALL which was on the buylist is up 50% over the last 2 weeks, I couldnt buy because I was out of capital at that point. I dont think it will take longer than a year for things to be sorted out. http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzYyMTQyfENoaWxkSUQ9MzU1NzU2fFR5cGU9MQ==&t=1

I would guess he would say you know what you are getting when you buy Berkshire and if you want a div then you have hundreds of other stocks to choose from. As of now he is still the largest shareholder by far. I dont care if Prem buys derivatives and I sure as hell dont care if Buffett does. I feel sorry for the guy on the other side of the trade. Also I dont have BRK for the same reason. I dont see it doubling at this point considering its size and have stocks in my portfolio which could triple. I want a higher return, but thats my problem not his. He warns people every year.

He does think they are expensive, but he sees stocks more likely than not going to 1500 or 1600 by October 2011. http://www.gmo.com/websitecontent/JGLetter_ALL_1Q10.pdf "the line of least resistance is a market move in the next 18 months or so back to the old highs, say, 1500 to 1600 on the S&P, accompanied by an equivalent gain in most risk measures, followed once again by a very dangerous break." Further, he is overweight emerging market stocks because (although he thinks they are expensive now) he sees them getting far more expensive. I share his thoughts. I think things are expensive, but my stocks are cheap. He is doing high quality large cap, I am doing beat up small cap. I dont see a bubble, but see it as a time to be careful. I am moving into things that havent run up. Drillers, O&G, and a few odd and end stocks. I am fully invested at the moment. Here is another good interview - http://video.ft.com/ search Grantham. Tx you still holding onto ATSG. This month I bought ATSG, SFK, ;D. I bought KSP today, it reminds me of BBEP.

I didnt even click the link but I am guessing Grantham is closer to being right when he says stocks are expensive right now