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wisowis

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    FFH Flat in Bull Market

    in Fairfax Financial

    Posted

    ...

    This is a company I have really wanted to like for a long time, but could never get comfortable with it simply because there are others who do what they do, but are better at it. The investment decisions for the past decade have been atrocious. Off the top of my heads its what? BBRY, RFP, SHLD, VRX, SD... probably more that I am forgetting, all of which fit the same theme. Troubled companies, with mediocre management, and TONS OF DEBT. The results have been as expected given those things. Not only have these been heavily concentrated positions, but they've collectively shown poor judgment and demonstrated a lack of an ability to locate good investments in a fertile environment.

    ...

     

    How big was their VRX position? I didn't know about that one...

    Garth Turner - Real Estate in Canada

    in General Discussion

    Posted

     

    The one-page note (see below) shows how 1-the % of mortgage debt servicing to disposable income has remained quite stable although there are small peaks that help to define the concept of margin of safety and how 2-the composition of the mortgage payment has changed over time (principal and interest strip). However what the author considers to be a source of “strength” and financial flexibility may correspond, at least to me, to a terrible misconception if the value of the underlying asset bought and financed is overvalued. In some scenarios, the price obtained upon selling may be a relevant input and a source of significant hardship as the value of liabilities is much stickier than the value of assets. At least, that’s one of the lessons learned from the American Experience in 2007-9.

     

     

    Apologies, but I am having trouble understanding this point. If you are putting a significant share of your mortgage payments into the equity of the home, doesn't it reduce the risk to the system? At e.g. 100% LTV, and with all payments going to interest, any drop in the value of the assets could cause insolvency. But at 80% LTV, and 50% of payments going into to the principal, the scenario of going underwater requires a >20% drop in asset values. I understand (psychologically) why trading loonies for quarters would cause hardship for homeowners/homesellers, but certainly reducing leverage in the housing market (which capital repayment does) reduces systemic risk, right?

    1994 Berkshire Hathaway Annual Meeting

    in Berkshire Hathaway

    Posted

    Are there transcripts? I only saw videos. Since transcripts are at least 5x faster for me and I have better retention reading than listening...

     

    I couldn't find them, link/directions would be appreciated.

     

    The videos have the transcripts underneath them (and the videos are synced with them - clicking on part of the transcript will skip to that part of the video and vice-versa). From what I can tell, all of them have transcripts.

    What are you buying today?

    in General Discussion

    Posted

    I bought some EFR.DB-TSX yesterday.

     

    It’s a pretty interesting piece of paper to have access to a potential Uranium bull market while getting paid to wait. Maturity is Dec 2020, strike is C$4.15. Implied vol of the outstanding warrants is over 60% while the debs trade at par.

     

    The debt issue is also a small part of the capital structure and I don’t think they will have a problem raising money but of course I think the debs could be a multibagger.

     

    So from what I can tell, the interest rate on the debs varies between 8.5-13.5%, depending on the (weekly) spot market price of uranium oxide. Management doesn't expect the price to exceed 54.99 by 2020, the price above which the interest rate increases (and price is currently at 22.75$, from Google).

     

    Any reason to be optimistic about a bull market in uranium?

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