claphands22

How much wealth does he have outside of his businesses which are all unprofitable from what I can tell? It costs over 80% to borrow TSLA shares -- people are spending lots of money betting TSLA will probably be a zero. Most of his business are remarkable and he is doing a great job trying to carrying human progress along, but I worry that in ten years (if not sooner) there will be articles turtles "The rise and fall of Elon Musk"

How do auditors check for share repurchases? Do they look for brokerage statements? How does the SEC check -- do they just go by the audited reports?

dcollon, you have a habit of posting great material. Thanks for the transcript.

Got to check dataroma.com for these things. He does a terrific job embedding value vidoes on his site.

Thanks for all your work Sanjeev! :D

Is he saying, he believes the stocks in his portfolio are trading at 1/5 of their IV? Berkshire is a great company, somewhat undervalued, but it is not sitting at one-fifth the value. When it is at one-fifth the value, wake me up.

Uh... I'm not going to say he's a liar, but if he isn't, he was doing some really stupid stuff. I agree Scott. If something is too good to be true....

Lots of way to make a buck, god knows I've made some investments I thought were intelligent but were just stupid. She kind of reminds me of Shia LaBeouf (kid from Wall Street 2) when he said his trading account went from 20K to 300K in 2 and half months. http://metro.co.uk/2010/10/05/shia-labeouf-i-had-to-learn-to-trade-for-wall-street-money-never-sleeps-541910/

Munger's Missed Multi Bagger "After protracted proceedings, the IRS allowed a charitable deduction to Mrs. Buck’s estate in the amount of approximately $11.7 million for her 69,156 shares of Belridge Oil stock. This represented a price of about $170 per share. It had been trading OTC in a range of $85 to $126 per share. In 1979, the stock was sold to Shell Oil Company for $3,665 per share, making the Buck Trust holdings worth $253,456,740. " http://www.nyu.edu/projects/hdale/buck%20Trust%20Article%20by%20HPD%20(1987).doc

WLP's shares outstanding went from 628 million in 2006, to 314 million in 2012. Besides Autozone, I don't know any company that has been equally as aggressive in share repurchases.

Nice catch!

Anyone else having trouble connecting to their interactive broker account?

Any book/letter recommendations to understand the car industry better? Was Once Upon a Car insightful?

Plan, Railroads are monopolys of land-carry, no one is going to build another railway that competes head to head with an established railway. Cars will. You could say with recent consolidation of the auto industry, the car industry is more likely to be less competitive with higher profit margins/roic, but I don't know how durable that advantage will be. Efficiencies in labor will just translate in cheaper vehicles for everyone; just like Berkshire Hathaway's textile operations spending lots of money buying an expensive machine, above profits only last until a competitor buys the same machine or better and the advantage vanishes. Having multiple car companies with similar distribution networks, labor costs, off-balance liabilities and scale for engineering/marketing talent should be equally advantaged. I don't see how the auto industry has changed so much. In terms of durable competitive advantages, I think the auto industry is closer to the blood-sport airline industry with it periodic consolidations then the toll collecting & efficiency helping railroad industry. Partly playing devils advocate here, but would love to more of the dynamics. GM has lots of cash, almost 100 in revenue per share and selling for 25. I keep on thinking, 4-5% profit margins shouldn't be too much to ask for in this industry, should it? Any book recommendations to understand the industry better? How is once upon a car?

Just watched the video. Manualofideas does a terrific job! In the video he gives out hints. Two areas that looked better than Japan were money centered banks and the auto industry. It is run by an incredible manager, in a misunderstood industry, there is a confluence of factors causing the price to fall and lots of tail winds in their future. It also could increase 10-40x in ten years. I am going with planmaestro, it's probably Fiat. Although, I wonder what makes the car industry misunderstood.

The guy has uncovered frauds, worked at one of the most prestigious asset firms in Australia (platinum asset management, also a big bac believer), big value guy, and his fund has returned 160% since 1/6/09. Hempton speaking at VIC is a big help to the owners of the VIC.

Arnold's sermons are great. He presents his analysis in a digestible form for his congregation. If I ever manage money with a similar client base I hope I could be equally as skilled.

Depends when he switched from long to short. Those Chinese RTOs had a huge run up and held themselves up fairly well until the China Media Express blow up.

Great links, thanks a ton. :)

Dejavu... I read almost the same thing about RIMM not too long ago. That is, people saying the IT department would never switch their Blackberriers to iPhones. *shrug* I have no opinion on Dell, so may the best analysis win.

haha, :o. I swear I did google this but didn't find anything. The google is not strong with me. Thanks for helping me out!

Looking for a September 5, 1985, Wall Street Journal piece on Chanos. When Chanos recommended shorting a Drexel-financed company called Integrated Resources, his bosses at Deutsche Bank balked: The company pressured the bank’s top executives to bury his research. Chanos was furious. According to his boss at the time, Jim Levitas, Geraldo Rivera, who’d heard about the situation, wanted to do a story. “Jim likes publicity. He was interested in getting it aired,” Levitas told me. “I had to tell Jim, ‘No, we can’t do that.’ ” Then, on September 5, 1985, The Wall Street Journal named Chanos prominently in a damaging front-page piece that accused short-sellers of slimy tactics like spreading rumors and even impersonating a Journal reporter to get access to insider information. His bosses at Deutsche Bank hated the attention, and Chanos soon found himself out of a job. http://nymag.com/print/?/news/business/52754/index2.html Unfortunately I am not in the states right now and don't have access to a library who can help me retrieve this, also the online versions don't go back this far. If anyone has a hold of this article I would greatly appreciate it. Thank you.

There was no basis...he flat out said that "Fairfax is a fraud and he thinks it is a zero." I was there at the first Value Investing Congress in New York when he said it, and have not/will not ever attend another one because they allow jackasses like him or Herb Greenberg to speak! And no, having other speakers like Mohnish or Guy that I respect does not make it any better. Who you associate with says alot, and people like Chanos or Greenberg are like the stuff I usually wipe off my shoe on the grass after stepping in it! Yes, I hold a grudge better than Buffett! ;D Chanos assumed Fairfax's offshore subsidiaries were involved in hiding gigantic reinsurance losses, which wasn't true. There were insurance losses, but they were in the open and not hidden in any offshore subsidiary. He was getting information from these "contracted researchers"...I'm guessing that one was working as an analyst for a research firm, releasing reports ahead of publication to hedge funds, and is now dead...and the other worked as an analyst for a large Australian hedge fund, used to call up large shareholders and tell them to sell their FFH shares, and now runs a blog. These cretins were also the ones behind the articles by Peter Eavis, Herb Greenberg, Fabrice Taylor, et al. I can't believe these morons are still employed...says alot for business journalism! Cheers! I've never been able to figure out the whole FFH short thesis, but unlike Parsad, I have a good deal of respect for Greenberg, Hempton and Chanos; besides FFH, most of them have a nice history of pointing out frauds that eventually fold. If you read through Hempton's blog from start-to-finish, he has continuously warned people of fraudulent companies and hedge funds that end up being fauds. Obviously FFH is still around and well respected by most investors, so the short thesis never worked out. The shorts would say it was because of stronger underwriting, a capital raise and an auspicious bet on subprime credit default swaps that saved their hiney. Roddy Boyd, who wrote Fatal Risk, has written a couple of articles about the FFH saga. One recently on the Reuters blog (http://blogs.reuters.com/great-debate/2012/09/20/how-financial-lawsuits-muzzle-free-speech/) and the other on his blog (http://www.thefinancialinvestigator.com/?p=702). He expands more on the short story there, but he was sued by FFH as being part of group of short sellers and journalists who tried to bring FFH down, so he isn't an independent party. FFH still has great investment ideas and does phenomenal charity work. FFH has done great things for Parsad and Prem's donation with Pabrai's charities will help a great deal of people. Yet, like all things, it's important to take a step back and try to draw your own conclusions. This is the corner of Berkshire and Fairfax, you aren't going to find a lot of people here who will share the short case for either of these two companies.

It would be interesting to see his past results. Do you remember if he was allowed to invest his cash in something other than treasuries? I do wonder what they do with their cash in a short only fund. Not shocked if his results were poor. I'm not sure what his average AUM were doing that period, but if you have to be fully invested and your position sizing is small, how are you going to have out-sized returns? If Chanos started Kynikos in 1985, he was working against a huge bull market until 2000, and the results you saw were only 4 years into the bear market, that would also affect his annualized returns. A low annualized YoY wouldn't be unreasonable. I don't know why people invest in short only funds. Seems like a hard system to work within and have impressive YoY returns. He short sells stocks based on fundamentals. Only ETF I know of that does that in particular is HDGE and their results are pretty poor and their expense ratio is bit over 3%. I think if you are shorting within a portfolio it needs to be opportunistic, not predetermined, but also far less concentrated than a long position with similar conviction because of inherent market risk. Einhorn seems to do well here.

Cable financial news allows for too much armchair analysis. In shorting, diversification and low position sizing has advantages because margin calls and fraudulent management can burn short sellers who concentrate too much. So Chanos has to have a wide body of knowledge across many industries even if the understanding of each company isn't very deep. I'm guessing his funds work in basis points and is under the institutional imperative of being fully invested. Let's say he caps each individual investment at 100 basis points that's 100 positions, at 75 basis points that's 133 positions at 50 basis points that's 200 positions! How are you supposed to know each individual case that well and only having your twenty second sound bite for your position? I am not saying this to belittle Chanos, I actually have a deep respect for him because he is one of the more rational voices who gets airtime on the major cable networks. He also has a past history of uncovering fraudulent behavior in management that has most likely saved would- be investors from losing further money in those companies. The reason why I am bringing up his many positions is to illustrate the kind of ecosystem he works in: one that demands having a mental model about why you are shorting a position because you can't spew textbook like data for each idea with only twenty seconds to explain (e.g. For Chanos, the bull case for Dell is, it's a cash flow rich company but if you include their acquisitions as R&D capex, it's burning money. His mental model of why it's a good short sounds correct, but given in opportunity to argue with a long investor who has done his analysis, Chanos would have to flesh out his argument even more. Unfortunately, that's not the ecosystem we live in). Chanos is a professional skeptic and if I took the opposite side of his trades I would triple check my analysis. This message board has Fairfax printed in the title and lots of people here made an admirable amount of money of taking the opposite side of Chanos. Yet, I would be weary of down playing Chanos because of Fairfax. If most value investors are ok with only two thirds of their ideas working out and the rest of the one third not doing well -- couldn't we apply the same idea for short sellers? Maybe only two thirds of their ideas work and and the rest of them don't? I mean, we don't bring up Dexter shoes every time Buffett has a video or Delta Financial Corporation whenever Pabrai has a video. We understand that investors will make mistakes and it's more about the batting average.