Saluki

Well, think of a classic example, LTV (Ling Temco Voight). They had a high P/E and they would buy low P/E companies and it would immediately make a positive impact on stock price because their earnings kept going up. So if they had a P/E of 30, and bought a company with a P/E of 10, that portion of the P/E 10 company's earnings becomes P/E 30 when valuing the acquiring company. The problem is that LTV had to keep borrowing to buy more and more companies and they had a low P/E because they were terrible companies and the end you have a company that's made up of other terrible companies and loaded down with debt. That's sort of what Valeant did (although they raised prices, which helped them boost earnings) and it's what a several dot com companies did in the 90s. Bricks and Mortar + clicks = a Low P/E company being bought by a high P/E company and having the earnings being revalued by the higher P/E by a gullible public. AOL Time warner, anyone?

I own both and have not bought or sold either in a while. I like both as counter-cyclical bets because they tend to get great deals in a downturn. Why do you prefer BRK? (I think it's a great company, but so big that I wonder if there are more doubles or triples in there)

I'm nibbling on Fairfax India. It's now at book value so you are getting the airport and some other nice assets at the prices that Prem paid for them. The 1.5% management fee should be more than offset by the growth of these assets and we are well below the high water mark, so it will have to go up sharply before you pay the performance fee which has a 5% hurdle rate. I'm also adding small amounts to JOE when it dips below $16, TPHS when it dips below $4 and Seaspan when it dips below $9.50.

Buffett used to feel great about the newspaper business and even when it was a good business, there where people who made a lot more than others at it even though they were operating in different markets. The same came be said with TV stations which, before cable, were a license to print money. Even the mediocre people got rich, but some people made fortunes. So I think in good businesses, a great operator can make it a great business. And even in a great business like Microsoft that is almost indestructable, a bad operator like Steve Ballmer can work his incompetence to turn it into a mediocre one. I think that's why a lot of cable operators ended up selling out to bigger competitors like John Malone. They were in a great business but weren't getting all the horsepower out of the engine so they were better off merging into a worldclass operator and let them take over the ship. Buffett has said that he doesn't like turnarounds, he wants great businesses with great management already in place. Maybe that's a recognition that some things where you don't have both are trades and other are lifetime purchases (100% owned operating companies).

An indirect (and possibly safer) way to play the fracking trend is Intrepid Potash (IPI). It's a small low-cost producer of potash (an oligopoly industry) but has been making a lot of money selling water to frackers. They have water rights in some desert areas where a lot of fracking is going on, and each well that is fracked needs thousands of gallons of water. I used to own it but sold out. It's come down since then but still not cheap enough for me to buy back in yet.

The reason for using gold is that everyone has always used gold. This is something that Mises espoused in The Theory of Money and Credit, but not to get too nerdy but the alternate theory is that money is a system of clearing and settlement of societal obligations because reciprocity only works in very small bands and there is no other way (pre-writing) of deciding who owns what to whom so we use money and we owe it back to society. Other people use other kinds of money. If I tried to buy a house from a Yap tribesman with gold, they wouldn't take it, preferring instead their far superior giant rocks with a hole in the middle. So, if you think about Bitcoin as as using the underlying blockchain technology to build secure applications on (like for transfering title to property or managing digitial permissions), instead of as money, I wonder why I would pick the most expensive version of something to underly applications if the others are exactly as secure. If you think about it as money (in the alternate clearing and settlement theory) why would a society switch from one system to another? Do you know of any country that has done so besides in an economic collapse where they knock a few zeroes off the bills and rename the currency? I don't own bitcoin but I wouldn't short it either. To me it's genuinely something where it's too early to tell.

I think the gold analogy is off base because you can't say "gold is way overpriced, let's switch to brass or bronze." Bitcoin is open source and although the blockchain/cryptocurrency model may be useful, if you can make another coin with the same software as bitcoin in a few minutes, I don't know why people would build applications upon it if the price is too high.

I really enjoyed this autobiography by Jim Clayton. I'm convinced that most businesses are terrible and the profitability of most businesses depends on the operator. That's why there are lot's of people with one struggling restaurant and a few people with a dozen thriving restaurants. Jim was in radio ad sales, used car sales, refurbished mobile home sales, mobile home manufacturing, real estate and eventually banking. And he did well in everything. In my opinion it's always a good idea to get some insight into the mind of a successful operator because they are few and far between. The Clayton sale to Berkshire was very controversial at the time and the subject of a few law suits. In this book you will see Jim's side of the story and why it was a great match for BRK and Clayton homes (BRK solved Clayton's problem of financing sales for their customers in a downturn so, unlike their competitors, they no longer had to rely on the kindness of strangers). My only critique of the book is that the typeface is so large that if the used a normal size font it would a 1/3 smaller and lighter. I tend to avoid any company that relies on debt as part of their business model, but from looking at this and my previous efforts to understand auto manufacturers, and John Deere, a pattern is emerging for me that sometimes financing is best part of a business. If McDonalds' tells you that the money isn't in the hamburgers, it's in the real estate, well maybe for some businesses, the money isn't in the business, the money is in the money. Not a book, like Poor Charlies Alamanack, that will change your worldview, but a good fun read with some business lessons thrown in as well as cameos by a lot of famous musicians like Elvis and Dolly Parton.

I love the tour of Buffett's office that you can find on YouTube. As you can see from my avatar, I had an "Invest like a champion today" sign made, like the one in his office.

I will sell my shares the moment they do that. Happy to do so - at least until someone changes my mind. ;) I'm open btw to the idea that this technology could lead to something useful, but I don't see why that makes Bitcoin a good investment. Maybe you can enlighten me and the other skeptics around here. I agree, the fact that people use blockchain and Bitcoin interchangably makes me doubt that it will work out well for most people speculating in this. It's like saying "what do you mean "Toys.com" won't make me rich? The internet will change everything." I'm sure blockchain will be used in a lot of new and interesting ways , but that doesn't mean that Bitcoin or any other particular crypto asset will be a big winner. And just because some of them will be big, doesn't mean that I'll be able to pick the right one when lots of computer and math whizzes are trying to pick the winners too and they understand it better than me. If you can make money this way, mazel tov! You deserve it.

Sold some junk and reinvested it in a little BRK-B, JOE, SSW and Fairfax India. My weighting on these is about 20% 10%, 10% and 1%

Sold off more than half of my Alliance Data (ADS) shares. When they sold off a big chunk of their business at an okay price and it still didn't move the needle for them I started getting tired of waiting. As I get more concerned about the economy, a company that has credit card receivables starts to look less attractive when you can pick up some BRK at under $200 (Buffett was buying back shares at a little more than this price last quarter) and FRFHF and Fairfax India at decent prices too, and they tend to scoop up bargains when it gets ugly on the street.

I sold this just under $4.00 because I thought the good stuff was already baked into the price. The price is now $3.26 a share and things have gotten better for them, so if it drops another 10% I may start buying again. Their earnings call transcript is here: https://www.fool.com/earnings/call-transcripts/2019/05/08/intrepid-potash-ipi-q1-2019-earnings-call-transcri.aspx With the acquisition of the Dinwiddie ranch and the associated water rights, they have "a new 5.8 million barrels per year of permitted water rights perfectly located in the Northern Delaware Basin and ready for sale." They think they can repermit it and get 13mm barrels a year. Even at the lower number, however, they can get premium pricing since its closer to the wells that need it and can get $1.25 per barrel and $1.50 per barrel. At the 85% margins they have been getting, that's $6.1- $7.4 million a year in additional income. (double that if they can get it re-permitted). Potash and Trio prices looking okay but still not great, but they are finding new sources of income along the way, like salt prodcution "And to just to add a little color on that, our salt sales increased year over year almost by 90% with $3.3 million in Q1 of '19 versus $1.8 million in Q1 of '18." The CEO owns a lot of stock so he eats his own cooking. It's a $400mm market cap company but it's basically a growing water company (fully priced) with a free potash mine thrown in for good measure.

This makes me want to go the conference and hang out with a chair and some popcorn. It makes Jeff Skilling calling someone an asshole on a conference call sound quaint.

I'll be the first to admit that most conference calls are terrible. A few are enjoyable though. SAFM: Sanderson Farms. Joe Sanderson is a good ole boy running a multi billion dollar chicken company and he knows chicken like the back of his hand. Occassionally an analyst will ask a stupid question and he doesn't suffer fools gladly. Wind him up and watch him go when someone has the wrong idea about something like bird flu or antiobiotic free chicken. Even though it's been a few years since I owned the stock, I still dial in occasionally . WPG: I'm not brave enough to buy this mall operator in 2nd and 3rd tier markets, but Lou Conforti talks like a truck driver from philly (cussing and inappropriate metaphors are very entertaining). Are there any you like listening to, whether you own the stock or not is irrelavent.

Congrats on your first brick! You should do something meaningful to you to celebrate. When I hit my first one (not counting real estate) and I realized I was officially an accredited investor, I decided to reward myself by going to an investor conference (NERD ALERT!) and meeting some of my heroes. I looked at Sohn and a few others but because I am a value guy decided on the Ivey Ben Graham one. Spending $500 vs $2000+ to meet the same people is a no brainer for me. In my 30s I was paying off law school debt and starting to build the foundations and now I'm working on FIRE and playing to retire (hopefully) when I'm 51.

I have one of those two books (I forget which one) sitting in my queue on my bookshelf. My GF works at Mckinsey and asked if I wanted a copy. I will move it up the queue based on the reviews here. thanks guys and gals.

I think it's well written because it can be easily understood by a lay person. A lot of books on investing are full of jargon or written by people who are terrible at writing, so it stands out because it's not terrible--which is the norm. It's a good book, but definitely not worth $1000+ I think I'm the only one on here who is not a fan of The Intelligent Investor. Maybe I need an earlier version of the book but something about the writing style in that book (and Security Analysis) I find quite grating. Books I have liked and re-read from time to time Peter Lynch: One up on Wall Street Greenblatt: You Can be a Stock Market Genius (only the title is terrible, the rest is wonderful) Phil FisherL Common Stocks, Uncommon Profits Marks: The Most Important Things Pabrai: Mosaic (hard to find, and mostly reprints of articles, but I think better than his other book, which is also good) and Berkshire Letters to Shareholders 1965-2014, in hardcover, is not recommended enough.

A couple of days ago Ivey Business School uploaded a bunch of videos of value investors (Klarman, Pabrai, Watsa, Walter Schloss, Francis Chou etc.) to their YouTube page. They used to be online but didn't come up in search (In other words, you could see them if you had the link, but couldn't find them by looking for it). I don't know why they unhid them, but it's a great gift to the value community. Enjoy: https://www.youtube.com/user/iveybusiness

I just finished reading it. Overall it is worth the read because unlike Berkshire, for which there are dozens of books, there are almost none that mention huge companies that avoid the spotlight like Brookfield. This is about the Toronto branch of the Bronfmans (the sons of the lesser Seagram's founder, who were not allowed to work in the liquor biz) as opposed to the Montreal Branch (the son's of the controlling founder, who worked in the booze business). It covers Brascan, Edper, Hees, and several other affiliated companies. There is an org chart in the back of the book because the web of interconnected ownership is hard to keep track of. The GOOD: it's a thorough and balanced book. Neither a puff piece, nor a hit job, it's long and well-researched and give a good history of the founding of the Bronfman's empire until the 1980s. If the corporate culture at Brookfield remains like the culture back then, I'm glad i'm an investor and that it's a part of the corporate DNA. The BAD: because there are so many companies and so many deals, it's hard to keep track of all the players and most of the deals aren't discussed in any depth. Given how large the company is and that the book spans decades, I don't know how to improve that but a deeper dive into a few deals would be nice. There are several side trips into things that don't add a lot (like discussions about their philanthropy and support for the arts), which are okay but not the show I came to see. Also, the book was written by a pair of business journalists, so it's very well researched, but reads like a very long newspaper article.

I know FFH owns half of Cara but as a non-canadian I wasn't familiar with most of their brands. I ate at a couple of them (Swiss Chalet and I forget the other one) when I was in Toronto for Fairfaxpalooza and they are perfectly fine restaurants but I don't get it. I know that Fast Casual is a growing segment but I don't see what is so exceptional about these brands that Prem wanted to buy 1/2 of it. As to the malware outbreak, it's much less worrisome than a databreach where customer info is stolen. I think it's just a tiny blip on the radar screen.

We're all human and we all make mistakes - I think he had a costly anchor bias with Sears. Not sure about other factors. I agree but I mean all three are investments that just jump out as common sense speculative, to at worst utterly terrible. Sears he'd been wrong for so long he had enough information to can it several years ago, before his performance really slipped. FNMA I get, but it's entirely speculative, will consume a ton of resources, and is way to big an allocation. And JOE is just such a no brainer bad investment I don't really know what to say there either. The fact that ALL THREE of these made/make up the bulk of his portfolio is crazy. I'm not sure I agree. I didn't buy SHLD because it's losing so much money and I don't think it's easy to turn around a retailer. Ackman's a bright guy and he hired a bright guy to run JC Penney, but couldn't turn it around. But if you're just looking at the numbers, it looks interesting. Just the back of the envelope: $10 billion in losses over the years, that could give you , say a $3 billion in value if you use the NOL to shield future income. $900 million for Craftsman $400 million for Kenmore (lowball by Lampert) ??? million for DieHard ??? million for the captive insurance co $2.4 billion in real estate (they have at least another Seritage in there) the common is selling for ~$120mm now, and at the time Bruce was buying Lambert was a big holder too and controlled enough of the debt that he could decide when it would go bankrupt and block any attempt to ram through any restructuring that was unfavorable to the common. He bought a house that was burning and tried to get as much furniture out of it before it was too late. The stuff inside was very valuable, it's just that they were using the funds to keep SHLD afloat and turn it around instead of selling off everything and moving on. As for JOE, I own a lot of this and I think it's qualitatively different from companies like Tejon Ranch or Texas Pacific Land Trust. But I go to florida at least once or twice a year, I own a condo down there and I'm generally bullish on the state as a whole, so take my view with a grain of salt.

Bump... I'm almost done with this book. As part of my deep dive into Brookfield I picked this up because it has several deals that involved Brascan (brookfield's predecessor). Prem Watsa and Fairfax also come up in the book and all I can say is I'm glad that Tony Griffiths is on the Fairfax board, he's a great operator and businessman. It's an interesting read about some companies that aren't written about a lot and worth a read. My only critique is that Bronfman entities (Brascan, Jonlab, Edper etc.) are a complicated structure and he doesn't go into detail about them before discussing the deals. The Brass Ring, however, has a good description about the background and even a chart in the back that shows the numerous Bronfman entities and thier interconnected ownership, if you're interested in that.

There is a great 6 or 7 episode podcast called Startup School by Seth Godin. Basically, it's a seminar he held for entrepreneurs that he edited and turned into a podcast. It's a great listen and gives you things to think about when structuring your business and positioning it in the market. (are people buying this because it's the cheapest? because it's organic? because it's artisanal? each one requires you to make different choices about operating the business and marketing).

There is a program that I started watching on Amazon called Inside the Storm. It's several episodes, each a mini documentary about the failures at Lehman Brothers, Kodak, Barings Bank and Kingfisher airlines. Very good so far, I thought you all would appreciate it.